Accounting-Based Performance Measures and Market Valuation of Industrial Goods Firms in Nigeria

Abstract

This study examined the effect of accounting-based performance measures on the market valuation of firms listed in the industrial goods sector of the Nigerian Exchange Group. The study specifically assessed the effect of Return on Equity (ROE) and Net Asset Value per Share (NAVPS) on share price. An ex post facto research design was adopted, utilizing secondary data obtained from the published annual financial reports of eleven (11) industrial goods firms covering the period 2019 to 2024. Given the manageable size of the population, a census approach was employed. Panel regression analysis and descriptive statistics were used to analyze the data. Share Price (SP) served as the proxy for market valuation, while ROE and NAVPS were used as independent variables. The findings revealed that ROE has a positive and statistically significant effect on share price (β = 332.92, p < 0.05), indicating that higher profitability enhances market valuation. NAVPS, however, exhibited a negative and statistically significant effect on share price (β = -118.65, p < 0.05), suggesting that book value-based measures may not strongly drive investor pricing decisions within the sector. The study concludes that accounting-based performance measures are value relevant in the industrial goods sector, with profitability indicators playing a more dominant role than asset-based measures in determining market valuation.