Effect of Financial Reporting Quality on Financial Performance of Manufacturing Firms in Nigeria

The major purpose of the study is to examine the effect of FRQ on financial performance of Manufacturing Firms in Nigeria. The study covered the period of 2005-2014. The Impact of DPS, NAVPS, CAR, MPS, PER, and EPS were tested on FRO. Simple regression analysis was employed in testing the date collected from annual published financial statement of selected manufacturing companies. Financial reporting quality was proxy by accrual using is Dechow 1994 model. The regression result shows that DPS, CAR, MPS, PER have negative significant relationship with FRQ while NAVP and EPS has positive significant relationship with FRQ. The researcher recommended that the government should by way of regulatory authorities compel manufacturing organisations’ to embark on proper recode keeping and should also see quality reporting as investment to their advantage.


INTRODUCTION
Financial reporting is one of the most important products of accounting system that tries to provide necessary information for users to make economic decisions on the evaluation of an economic enterprise's profitability and performance, measuring and providing information that makes it possible to evaluate the past performance and effectively assess the product, and possible future profitability and anticipated activities that can be prerequisite for achieving this goal (Bolo 2007). Financial reports are formal records of business financial activities. They provide an overview of a business profitability and financial condition in both short and long term. According to (1) To assess the extent to which Financial Reporting quality affects, Earnings per Share. (2) To determine Financial Reporting quality affect on Dividend per Share.
To evaluate the extent to which Reporting quality of financial state can boost Market Price per Share. (4) To assess the gross impact of FRQ on Price Earnings Ratio. (5) To determine the effect of FRQ in the Net Asset value per Shares.
To investigate the effect of FRQ in Current Asset Ratio.

RESEARCH QUESTIONS
To achieve the above objective the following research questions have been raised.
( 1) To what extent does financial reporting quality affect performance using earning per share?
To what extent does financial reporting quality help to boost the dividend price per share?
To what extent has financial reporting quality affect market price per share?
To what extent has financial reporting quality affect net asset value per share?
To what extent has financial reporting quality affected net asset value per share?
To what extent has financial reporting quality affected current asset Ratio.

RESEARCH HYPOTHESES H01
There is no significant relationship between FRQ and Earning's per share.

H02
No significant relationship exists between the FRQ Dividend per share.

H03
No significant relationship between FRQ and Market Price per share. H04 There is no significant relationship between FRQ and Price earring Ratio. H05 There is no relationship between FRQ and Net asset value per share.

H06
No relationship exist between current asset Ratio and FRQ.

REVIEW OF RELATED LITERATURE 5.1 THEORETIC FRAME WORK
The following theories based on an

Agency Theory
Agency theory is one of the most widely used theories in management Arthus and Busentiz, (2003); Daily, Dalton and Rajagopalon (2003). Agency theory is about the relationship between two parties, the principal (owner) and the agent (manager) Esienhardt, (1989);Jensen and Meckling( 1976). It examines this relationship from a behavioral and a structural perspective. Theory suggests that given the chance, agents will behave in a self-interested manner, behavior that may conflict with the principal's interest. As such principals will enact structural mechanisms that monitor the agent in order to club the opportunistic behavior and better align the parties' interests. Firm performance by way of lost immunization and greater efficiencies is the desired outcome of the agency theory perspective. When the ownership and management of a firm are separated, theory suggests that agency problem are created and agency cost are incurred to alleviate these problems. Separate of ownership and management is a key component of agency theory, the principal authorizes or delegates work to the agent and the agent is expected to act in the best interest of the principal.

STEWARDSHIP THEORY
Stewardship theory is also about the employment relationship between two parties, the principal (owner) and the steward (manager) (Davis et al 1997;Donaldism and Davis 1991). It to examine this relationship firms a behavioral and a structural perspective. Theory suggests that stewards will behave in a pro-social manner, behavior which is aimed at the interest of the principal and thus the organization.
Firm performance such as sales growth or profitability is the desired outcome of a stewardship perspective. Theory suggests this outcome is achieved when both the principal and the manager in the employment relationship select to behave as stewards. At the heat of stewardship theory is the assumption that the principal-steward relationship is based on a choice. When both parties choose to behave on stewards and place of the principals interest, first the theory suggests a positive impact us performance because both parties are working toward the same goal

EMPIRICAL LITERATURE
Empirical evidence are bound on financial reporting quality , Hassan Usman S, and Bello Anmad (2013) examined firm characteristics and financial reporting quality of listed manufacturing firms in Nigeria. They investigated firm's characteristics from the perceptive of structure, monitoring and performance element and the quality of financial reporting measured by modified model of Decheward Dechew (2002) of listed manufacturing firms in Nigeria. The work pointed out those firm characteristics of listed manufacturing firms in Nigeria has significant impact on financial reporting quality.
Lopes Claudia Maria Ferreira P. and Cerqueira Antonio and Elisio Brandao (2011) investigated the financial reporting quality effect on European firm performance. The paper analyze whether accounting quality produces any impact on firm performance using any accounting data; the abnormal accruals methodology to evaluates accounting qualifying and ROA to determine firm performance, the study was done for 17 European countries.
Findings confirm that decreasing accounting quality will increase ROA and vice versa. Seyed Moosa Mohammadi (2014) carried out as a study on the Relationship between financial reporting quality and investment efficiency in Tehran stock exchange. A sample of 93 firms in Tehran stock exchange was taken from 2009-2012, result showed that financial reporting quality had a significant positive correlation with the investment efficiency.
Mahwood Macinad, Froogh Heirani and Ahmed Mirhosseini (2012) examined the Relationship between Financial Reporting Quality and return volatility and the role of institutional and accounting factors. Tehran stock exchange was used with a sample 70 listed firms from 2006-2010, firms were selected according to the systematic sampling and tested by regression analysis. The findings revealed that there is no significant relationship between financial reporting quality and the return volatility.
Try Tuuisandi and Erita Puspitasari (2015) studies Financial Reporting Quality-before and after IFRS adoption using NICE Qualitative characteristics measurement. The research used paired sample test to analyze the data. While the financial reporting quality before the IFRS adoption was represented from 2009-2010, while financial reporting quality after IFRS is represented by the period 2012-2013. It was find out that IFRS adoption increase the quality of financial reporting quality.
Abdulkadir Madawlli and Noor Afea Amran (2013) studied Audit committees-how they affect financial reporting quality in Nigeria companies. A sample of 70 companies in the Nigeria stock Exchange was used, while Dechew and Dicuer (2012) model was used to measure earning's as a proxy for financial reporting quality. The result shows that an audit committee was positively associated with improved financial reporting quality.
Moses Buuenya (2014) Examine the quality of accounting information and financial performances of Uganda's public sector. The study adopted a broad of cross sectional descriptive research designs and statistical random sampling. The result shows that 58% of the financial performance level attributed to financial information quality. It is therefore desirable that public sector entities empty highly shield professionals that adhere to reporting requirements of the legal and regularly framework.
Nasrine Klai and Abdelwahed Omiri (2001)  The result shows a significant positive relationship between monitoring characteristic and financial reporting quality.

RESEARCH METHODOLOGY
The study covers the Federal Republic of Nigeria. The study focuses on the effect of financial accounting reporting quality on performance of manufacturing firms in Nigeria.

RESEARCH DESIGN
The research design for this study is ex-post facto. The ex-post facto research design is a method of finding out possible antecedents of event that have happened but cannot be manipulated by the investigator. This design allows the researcher to describe observed events using the data derived from observation to determine the relationship between financial accounting reporting quality and firm performance.
Ani (2010), Madugba, Ekwe and Kalu (2015) Eke & Madugba (2015) adopted the ex-post facto research design in their studies of this nature. The data for the studying is sourced from the annual financial report published by the sampled companies. The dependent variable financial performance is measured by earnings per share, dividend per share, market price per share, price earnings Ratio, net asset value per and current asset Ratio. The independent variable financial reporting quality is measured by Accrual model.

DESCRIPTION OF RESEARCH VARIABLE
The research variables we structured into dependent and independent variables for the purpose of the analysis, though the main concern is to evaluate the nature, magnitudes and strengths of their interaction between the variables. The independent variables of the study are Earnings Per Share(EPS), Dividend Per Share(DPS), Market Price per Share(MPS), Price Earnings Ratio (P/Ratio) ,Net Asset Value Per Share(NAVPS), Current Asset Ratio(CAR). While the Accruals, Model is use for financial Reporting quality which is the dependent variable.

EARNINGS PER SHARE (EPS).
When a firm shows convincing signs that it has the capacity and potentials of earnings especially in the capacity  Vol.10, No.11, 2019 and potentials of earnings especially in the long term, investment are most likely to an increase in the earnings per share. Earnings per share are calculated by dividing the company's total earnings or income by the number of shares the company has outstanding. Total earnings are proxies in this paper by Profit before interest and tax (PBIT).

DIVIDEND PER SHARE (DPS).
Dividend per share is the sum of declared dividends for every ordinary issued divided by the total dividend paid to equity shareholders over an accounting year.

MARKET SHARE PRICE (MPS)
Market share price is the value of a firm's equity share. Equity share is the unit of ownership of a company. The shares are sold to generate fund for expansion, diversification and investment.

NET ASSET VALUE PER SHARE (NAVPS)
Net asset value per share is the value of a firm's total assets (fixed and current assets). Less the value of its liabilities (long and short term liabilities) divided by the number of outstanding equity share. It is an acceptable yardstick for estimating the performance of companies with respect to the property and investment of the companies.

CURRENT ASSET RATIO (CAR)
The current ratio is an indication of a firm's mallet liquidity and ability to meet creditor's demands. Acceptable current ratio vary from industry to industry and are generally between 1.5 and 3 for healthy business if a company's current ratio is in the large, then it generally indicates good shut term financial strength. If the concept liabilities exceed current assets (the current ratio is below 1) then the company may have problems meeting its shut term obligations. 6.2.8 ACCRUALS Accruals are cash flow operation from its reported earnings; part of it follows inherently from the growth of business activities.
In the paper it is computed as follows Accruals = (Accounts Receivable + Inventory + other Current Assets) -(Accounts Payable+ other Current Liabilities)-Depreciation. Why using Accounts is to construct an earnings measure that is less noisy overtime than the realized cash flow is (Dechow 1994 .000 (a) Dependent variable : Accruals(FRQ) (b) Predictor (content) Price earnings ratio, market price per share, net asset value per share, dividend per share, earnings per share and current assert ratio.
value of -.190. This implies that the fincial reporting quality of companies in our study do no effect their dividend per share. Following the result in the table above, net asset value per share is shown to have significant and positive relationship with financial reporting quality of the companies in our study. This is evidenced by co-efficient of regression value of .241, indicating that any variable that affects net asset value per share negatively will also affect financial reporting quality of the companies in our study negatively.
Current asset ratio showed an insignificant and positive relationship with financial reporting quality of companies in our study. This is supported by a co-efficient of regression value of .328, indicating financial reporting quality does not affect current asset ration of the companies in our study.
Market value per share is shown to have an insignificant and positive relationship with financial reporting quality of the companies in our study. This is evidence by a co-efficient of regression value of .080.
The table above showed that price earnings ratio has significant and negative relationship with financial reporting quality of the companies in our study. This is evidence by a co-efficient of regression value of -.576.The adjusted of multiply determination that about 33.4% of the total variation observed in the dependent variable is explained by the predictor variables (independent) in our study. Furthermore, the F-ratio of 5.095 showed that the model is statically significant. Hence, we reject the null hypothesis and conclude that financial reporting quality affect financial performance of the companies in our study.

Conclusion and Recommendations.
In this study, effort has been made to analyze the effect of financial reporting quality on Financial Performance of Manufacturing firms in Nigeria. The study considered accounting and market based indices. Earnings per share, Market price per share, Price earnings ratio, Net asset value per share and Current asset ratio in determining the impact on FRQ on financial performance. The result of the sample for the hypothesis shows that Dividend per Share, Current asset Ratio. Price Earnings Ratio, Market price per Share has negative significant relationship with Financial reporting Quality. This result does not invalidate that this indices are not performance indices but implies that investors do not pay attention to them using them for indicators, Net asset value per Share and Earnings per Share have positive significant impact on financial reporting quality indicating that investors make use of them.

1 Recommendations.
Based on the findings of the study we make the following recommendations.
1. The government should endure more disclosures are made which will guide investors whether to invest or not. 2. Financial quality helps a company reputation by creating a positive image in the mind of investors, customers hence it should be taken seriously and be prt of financial institutions and organisations. 3. Manufacturing companies should consider financial reporting quality s an investment thus making sure that their financial statement should be of good quality. 4. Research studies should be encourage in the field of financial reporting quality as this will help investors also create awareness of what is involved in the financial statements.