Adequate accounting information is essential for the efficient functioning of capital markets and by extension economic growth of a nation. The development of stock market is dependent on the integrity of financial reporting process. Lack of reliable accounting information generates low investment, which invariably affects the economic growth. The objective of this project is to ascertain the link between accounting information, stock market and Nigerian Economy. Simple regression was used to analyze the investors’ reactions to accounting earnings by analyzing changes in share prices of eight companies(four from conglomerate and four from banking sector) for over a period of four years, while correlation between stock market and the Nigerian Economy from 1970-2003 was examined using Cobb-Douglas production function. Empirically, the result indicated that investors reacted to accounting earnings and there was a link between the stock market and Nigerian Economy. The study provides useful insights to all the users of accounting information, especially, the policy makers in Nigeria, operators in the stock market, academics, investors and practitioners dealing with economic development around the world. The study advocates for greater commitment and more efficient accounting system on the part of the preparers of financial statements that will bring about the required reliable accounting data and information which will in turn increase investors’ confidence in Nigerian stock market. The study recommends that Stock market regulators should put in place mechanisms to improve efficiency of the market that can stimulate a speedy economic growth.
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