Financial Reporting and Stakeholders' Information Needs in Nigerian Companies

Abstract

Corporate entities create values with variants of capital which include financial, manufactured, human, intellectual, environmental, social and relationship capitals. However, their stewardship reports, which are IFRS principles-based generalpurpose financial statements (GPFS), satisfy only the information needs of financial capital providers. Although such reports conform to standards and best practices, they create not only the false and misleading impression that organisations only operate with financial capital but also, their decision usefulness is impairedleaving in its trail, information expectation gap. The objective of this study to address the observed problem of information expectation gap associated with GPFS with a view to recommending a Financial Reporting framework that will satisfy the needs of various stakeholders.

As adesk research, the study carried out a literature review of how stakeholders' information needs are addressed incorporate entities'annual reports, standard setters' technical pronouncements, regulations and pieces of legislationin Nigeria. It also reviewed other relevant publications including journal articles and periodicals.

Using the Resource Dependence and Stakeholders' theories, this study supports previous works which established that since value is created by all capitals in an interdependent business environment, all providers of capital should equitably share in the pains and gains. The study reaffirmed the findings of previous studies that the subsisting GPFS have become inadequate to meet both financial and non-financial information needs of stakeholders. The study revealed that a change in the corporate reporting framework will satisfy the information needs of Nigerian stakeholders and also have positive impact on the entity's legitimacy, public perception and its sustainability.

It therefore recommends the mandatory adoption of integrated reporting which contains financial and non-financial information as this would have positive influence on investment and capital allocation decisions of stakeholders of listed entities in Nigeria.