Moderating Role of Leverage on the Relationship Between Business Models and Value Relevance of Accounting Information

This study examines the moderating role of leverage on the relationship between business models and the value relevance of accounting information in Nigerian firms. Using a sample of 70 firms listed on the Nigerian Exchange Group, the study employs regression analysis to assess the impact of various leverage metrics (Debt-to-Equity Ratio, Debt-to-Total Assets, and Long-Term Debt-to-Equity Ratio) on the relationship between business models and stock performance, with market capitalization as a control variable. The findings reveal that business models alone do not significantly impact stock performance. However, their interaction with leverage variables provides deeper insights. Specifically, the study finds that Long-Term Debt-to-Equity Ratio has a strong negative effect on share price, indicating that excessive reliance on long-term debt signals financial distress, leading to lower investor confidence. Conversely, market capitalization exhibits a significant positive relationship with stock performance, suggesting that larger firms are perceived as more stable and less risky. Additionally, the interaction between business models and Debt-to-Equity Ratio positively influences stock performance, highlighting the importance of an effective business model in leveraging capital structure efficiently. However, the interaction between business models and Long-Term Debt-to-Equity Ratio (-0.2928, p-value = 0.000) negatively impacts stock performance, further reinforcing the risks associated with excessive long-term debt, regardless of business model effectiveness. The study recommends that firms manage their financial structures carefully, particularly reducing long-term debt while optimizing their business models for market adaptation and operational efficiency. Policymakers should create an enabling environment for firms to scale operations by offering financial incentives, improving regulatory frameworks, and enhancing access to capital markets.