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Are abnormal accruals values relevant? Evidence from Sub-Saharan Africa

Author

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  • Godfrey Akileng
  • Diana L.K. Ssekiboobo
  • Eric Nzibonera

Abstract

This study examines whether the market values abnormal accruals differently in Sub-Saharan Africa. Abnormal accruals signal managers' valuations of a firm. Alternatively, abnormal accruals are opportunistic and, therefore, misrepresent the value of the firm. We use panel data from listed firms in securities markets in South Africa, Nigeria, and East Africa for the period 2006-2020 collected from annual reports and financial market databases. Ohlson's (1995) price model is used as the basis for regression analysis to measure value relevance. We find that abnormal accruals are value-irrelevant and thus discounted by the market. Rational investors perceive abnormal accruals to represent managers' opportunistic actions. This study contributes to the literature on the value relevance of accounting information and market-based accounting research on African markets.

Suggested Citation

  • Godfrey Akileng & Diana L.K. Ssekiboobo & Eric Nzibonera, 2025. "Are abnormal accruals values relevant? Evidence from Sub-Saharan Africa," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 29(8), pages 1-23.
    • Handle: RePEc:ids:ijecbr:v:29:y:2025:i:8:p:1-23
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