This research project was designed to examine “effects of Published Financial Statement on Shareholders Investment Decision” (A Study of Guinness Nigeria Plc). The primary and secondary sources of data were adopted. Questionnaires were distributed by hand and ninety nine were returned. Upon presentation and analysis of data, hypotheses were tested empirically using analysis of variance (ANOVA). The research revealed the following: Investors do not analyze financial statement before making an investment decision. Published financial statement of a company does not show true and fair view. Majority of the respondents agreed that information contained in the company’s annual report could be reliable for effective investment decision. The researcher recommends that all public limited enterprise should continue to publish their financial statement every year; hence it helps shareholders in making investment decision.


Title Page - - - - - - - - i

Certification - - - - - - - - ii

Dedication - - - - - - - - iii

Acknowledgement - - - - - - - iv

Abstract - - - - - - - - v

Table of content - - - - - - - - vi



Background of the Study -----1

Statement of the Problem-----7

Purpose of the Study-----8

Research Questions-----9

Statement of the Hypothesis----10

Significance of the Study----10

Scope of the Study------11

Limitation of the Study11

Definition of Terms-----11


Review of Related Literature----13

Statutory Imperative of Published Account15

Statement of Accounting Policies---17

Profit and Loss Accounts----18

Balance Sheet------20

Note to Financial------21

Directors Report------21

Auditors Report------22

Statement of Source and Application of Fund-23

The Value Added Statement----24

Importance of Financial Statement---24

The Credibility of Published Financial Statement-26

Information Source ------27

Companies Financial Analysis----29

The Published Financial Statement of Guinness Nigeria Plc 32


Research Methodology-----36

Research Design------36

Sources of Data------37

Area of Study-------37

Population of the Study-----37

Determination of sample size----38

Reliability of the Test Instrument---38

Validity of the Research Instrument - ---39

Data Analysis Techniques----40


4.0 Data Presentation Analysis and Interpretation- - - 42

4.1 Data Presentation - - - - - - 42

4.2 Analysis of Questionnaire Responses - - - - 42

4.3 Test of Hypothesis - - - - - 50


Summary, Conclusion and Recommendation -57

Summary of Findings-----57

Conclusion -------58

Recommendation ------59

Bibliography - - - - - - 60

Appendix - - - - - - - 63




Each person like every business requires some measures of both financial position and financial performance in assessing his financial conditions. The financial position depicts one’s wealth at ascertain point in time while one’s financial performance describes once.

Financial statements according to Illoumezie (2006:33) are like compasses “which navigators use to locate their bearing and find direction”. People use them to gauge their financial positions at various points in their lives in order to judge their progress towards their financial goals.

Financial statements according to meigs and meigs (1981:28) refers to reports which summarize the financial position and operating results of a business (balance sheet and income statements). It referred to as genera purpose that satisfy the need of many groups generally called stakeholders. These groups are particularly concerned with the risk inherent in and returns provided by their investments, and who require accounting information to enable their assess the ability whether they should buy, hold and sell their investments.

According to Anayaogu (2002:14) financial accounting provides information to eternal decision makes such as shareholders government, creditors, employees etc, these are people with whom or from whom money is ultimately paid or received. Anayaogu (2002:20) also states that records of

financial accounting includes various ledges accounts, profits and loss accounts, balance sheet and other financial records. These records are intended to show the strength, progress, portability, management effectiveness and stewardship.

Financial statement are the means of communicating to interested partners information or the resource, obligation and performance of the reporting enterprise in a simple, clear and understandable form to all its user with such attributer of relevance to decision reliability, consistency and comparability materiality efficiency and understandability.

According to information provides continuity in history as quality in monetary terms of economic activities resources and obligations of a business enterprises as well as the various activity that cause a change in the level of these resources and obligation. It is also serves as parameter for evaluating the performance of a business enterprise and as a measuring tool to both the management and decision markers and possible sale of shares by shareholder when actual results deviate from the target objectives. The importance attached to accounting information cannot only be related to management and the government but it also cuts across the cars of the various categories of creditors, employee, and other water cooperate bodies and potentials investors as well.

The annual report and accounts are said to be published owing to the fact. It is being printed and dispatched to each shareholder and any other unfrosted where person on request. The annual reports and accounts are the primary means of communicating vital economic information in the cooperation’s

resources and obligation to absentee owners and could be investor by the management. The published financial statement serve as a means of conveying business information to the equity investor groups (shareholders), the loans creditors group, the employee groups, the business contract group, the government and its agencies as well as the general public. It gives a concise and genuine picture of an enterprise profitability trend and its financial position. The information contained in the published financial statement act as a basis for which shareholder maker investment decisions.

However, the account days of pre-colonial administration, the preparation and publication of financial reports used by owner managers for internal control and cost determination. This inter became. Inadequate role to increase completely of business organization. At the onset of industrial revolution, trade begins to increase and expand. This necessitated employing managers to manage the business on behalf of the shareholders. Managers positions now necessitated companies to prepare and publish a financial report that would reveal to the owners (shareholders) the operational state and financial position of the company and how the capital contributed by the shareholder had been utilized in the realization of the set out objectives of the company.

The company Act 1963 outline that every registered business organization should maintain and submit audited financial statements every year during the annual general meeting (agm) where. It is laid to the members. This is in consonance with the provision of schedule two of the companies and allied

matter decree of 1990 which states internally that the form and contents of published financial statements and with the accounting standard issued from time to time by the Nigeria Accounting Standard Board (NASB).

Meigs & Meigs (1981: 14) states that the preparation of financial statement is not the first step in the accounting financial statement is not the first step in accounting process. At the close of financial period, the stakeholders such as investors of a company naturally desires to ascertain the following:

(a) The result of the company’s operations for the period.

(b) The resources and hostilities of the company over the period in question.

(c) Wealth created by the company and how it has been distributed.

(d) Financial resources acquired and how they have been a expanded.

Thus, published financial statement prepared under companies and allied matter decree (CAMA) 1990 supplies information about the above. As a matter of fact, shareholders of any corporation would require annual corporate report published about the entity and which must be relevant, sufficient and reliable.

The corporate report published in 1994 by a working paper setup by Accounting Standard Committee (ASC) to be reexamined the scope and aims of published financial reports identified seven user groups to include:

1) The equity – investors group

2) The analysis – advisory group

3) The employee group

4) The creditors

5) The business contact group

6) The government and its agential

7) The public

Bell (1998) identified (15) fifteen information needs of users of financial statements, which art concisely summarized here as the financial need of shareholders in the published financial statement of any business entity. These includes information for

(a) Evaluating the performance of the entity.

(b) Assessing the objectives established previously by its management members or owners.

(c) Evaluating managerial performance, efficiency and objectives including employment, investment and profit distribution plans.

(d) Assessing the liquidity of the entity.

(e) Assessing the economic stability and inevitability of the reporting entity.

(f) Assessing the capacity of the entity to make future realer nation of its resource for either economic or social purposes or for both.

(g) Estimating the future prospects of the entity which respect to dividend payment remuneration and other cash outflows and predicating future levels of investment, production and employment.

(h) Predicting, compressing and evaluating potential cash flow

Guinness Nigeria is a Nigerian Brewery founded in 1962. It engages in brewery, packaging and marketing of spirits, wines and beer in Nigeria. It offers

its products under Guinness Foreign Extra Stout (1962) Guinness Extra Smooth (2003) Malta Guinness (1990) Harp Lager Beer (1974) Gordon’s Spark (2001)

Smirnoff Ice (2006) and Satzenbrau (2006).

The company was incorporated in 1950 and it’s headquartered at 24 Oba Akra Avenue Ikeja industrial estate, Ikeja Lagos Nigeria. Guinness and unlevered are the main shareholders, although some of the shares are locally owned. Guinness Nigeria plc is a company that believes in enriching its community. This it has achieved by embarking on laudable corporate social responsibility projects in several communities. In Nigeria these projects are water of life initiative, which currently provides potable water of over 500,000 Nigerians spread across several rural communities from Northern to Southern Nigeria.

The company was listed in exchange market in the year 1965, with its managers/ directors. Engr. (Chief) R.A. Alabi, OON (Chairman) Mr. N. Blazquez (vice chairman) Mark R.M. Taylor (MD/CEO) and B.A. savage (OMD) of Guinness Nigeria Plc, and so many other staffs.

The company’s registrars is union registrars limited 2, Burma Road Apapa Lagos. And there end of accounting year is every 30th June of every year as the case maybe. The company has four branches in Nigeria so far, they have been to grow their turnover at average ratio of 20.7% per year over past five years and they are currently on track to overtake their turnover for the 2011 full year. Based on this result the return on equity improved from 0.17 to 0.31, this

leads to an estimated full year return on equity of 0.60. They have a current ratio of 1.56 and a quick ratio of 0.98.


Virtually, every economic entity maintains its records on a historical cost basis. The historical cost figures alone are inadequate. This is because net profit is over stated, the balance sheet does not reflect the current worth of the enterprises and inflationary situation, and the charging of the historical cost of operations to profit and loss account may endanger the maintenance of the operating capital of the entity. It is obvious that the current situation of published financial statement has some limitations. This is because the result of operation (net profit) is a function of accounting standards, policies and conventions adopted by a company and used in the preparation of the financial statements.

The financial statement should provide accurate financial information; which shareholders can effectively manipulate to get the best out of their investment. It is pertinent to say that analysis and interpretation of any financial statement will descend on the adequacy and accuracy of the said statement and how the financial information is being disclosed so as to enable to shareholder make major investment decision such as “if to hold their shares or sell them and invest in bond other than equity”. If they are to buy more share of the same firm, but the problems statements.

i) Some shareholders cannot interpret financial information correctly and cannot be able to make good use of the financial information disclosed to get the best out of their investment.

ii) Company’s concepts, conventions and principles are not capable of meeting the user needs.

iii) Published financial statements do not induce more people to make investment in some companies.

iv) Some shareholders are not oriented before making investment decision.

v) Sometimes the dividend are not satisfactory considering the risk involved in investment.

vi) Some financial statement sometimes guide the investors.

vii) Some financial statement prepared are window dressing.

viii) Some company’s find it difficult to make their financial statement available to the shareholder at any point in time.


This research was undertaken to find a better solution to the research problem(s) already existing in this area of study. It is therefore imperative to establish some guiding steps and principles in decision making process which will ensure that a given objective is not defeated and to find out if the financial information that emanate from the published finance statements makes any meaning to investing public.

a) To know whether the information in the financial reports of companies and other financial information areas are understood and used for investment decision making.

b) To ascertain the extent the company’s concept, convention and principles are capable of meeting users/ investors needs.

c) It is deemed to state categorically and in clear terms that the influence of corporate reporting to investment differences in accounting methods and how financial statement deficiency affects the investors (shareholders).

d) To ascertain the extent published financial statement induced more people to invest in companies.


Bragging into consideration the complexity of making financial decision and the immediate problems which necessitated this researcher study, the work seeks or intends to provide answers to the following questions posed.

1) Do investors understand financial statement very well?

2) What do they (investors) see as the importance of published financial statement of companies?

3) Do the companies publish the market value of shares and dividend of the company to the shareholders?

4) To what extent do companies concepts, conventions and principles capable of meeting users need?

5) To what extent do the financial statement of a company encourage investors to invest?

6) What is the best source of information to the shareholder on investment decision?

7) Do the shareholders carryout analysis to the appropriate personnel?


Ho: Most investor does not analyze financial report before making an investment decision.

Ho: Most investor does analyze financial report before making an investment decision.

Hypothesis Two

Ho: Financial statement does not show true and fair view of the statement in your company.

Ho: Financial statement show true and fair view of the statement in your company.


This research work is expected to be of great importance to investors and shareholders in particular. It will serve them as a guide to individuals who are interested to acquire shares in any firm, company or business organization. It is expected to serve also as an indispensable tool for current and potential investors of business organization as well as companies in their investment

decision making by way of providing sound investment strategies for shareholders and other users of published financial statement.


This research work covers all the relevant accounting information that was needed by investors/ shareholders of Guinness Nigeria Plc and their investment states of Guinness Nigeria Plc using its published annual report and financial statements between 2004-2003. The goal behind every investment is either return, capital appreciation, therefore the general goal of any investment decision that is obtainable in our business enterprise can be related to another.


There is no research/ study that is hitch free, during the course of this study, some of the constraint failed and those envisage making this task all the more daunting are;

1) Financial constraints

2) Lack of co-operation among staffs

3) Limited time


DIVIDEND: Is the distribution of part of the earnings of a company to its shareholders. The dividend is normally expressed as an amount per share on the par value of the share.

DILUTION OF EARNINGS: This is when additional shares of stock are sold without an immediate increase in income. This result is a decline in earnings per share until earning can be generated from funds raised.

EARNING PER SHARE: Is the amount of profit after tax and preference dividend (but before taking accounting of extra-ordinary income and expenses attributable to each ordinary share in issue and ranking for dividend during the period.

FINANCIAL INFORMATION: This is any information dealing with the operation of company and how the fund acquired.

EFFICIENCY: This refers to achievement of organization goals within minimum waste of resources that is best possible use of resources.

FINANCIAL STATEMENT: This is a periodic financial reports accounts and other related documents that highlights the financial position of an enterprise as well as the financial profitability.

INVESTMENT: This is the commitment and utilization of funds and other scare resources in a project with the expectation, that the utilization will generate return.

ORDINARY SHARES: These are the common stock of a company which is to be issued out for sale to individual public.

PROFITABILITY: Profitability refers to the relationship between profit and the resources employed in earning it. Its resultant effect is usually expressed as a percentage.




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