Accruals Quality and Firm Value of Listed Pharmaceutical Companies in Nigeria

This study examined the effect of accruals quality on the firm value of pharmaceutical companies listed on the Nigerian Exchange Group (NGX) over the period 2018 to 2023. Employing an ex-post facto research design, data were obtained from audited financial reports of five selected firms, resulting in 30 observations. Discretionary accruals were measured using the Modified Jones Model, while firm value was proxied by Tobin’s Q. Firm size was measured as the natural logarithm of total assets. Panel least squares regression analysis showed that discretionary accruals had a significant negative effect on firm value (β = -8.53 × 10⁻⁸, p = 0.0311), indicating that higher discretionary accruals reduced market valuation. Firm size also had a significant negative effect (β = -1.1935, p = 0.0001), suggesting that larger firms tended to experience lower Tobin’s Q. The overall model explained approximately 65% of the variation in firm value (R² = 0.6501) and was statistically significant (F = 7.12, p = 0.0002). The findings concluded that lower accruals quality adversely impacted the market value of pharmaceutical firms in Nigeria, highlighting the importance of accurate financial reporting. While firm size showed a significant direct influence on firm value, the study did not include an interaction term to test its moderating effect on the relationship between discretionary accruals and firm value.