Author(s): Adewojo Adeyemi Ademola,Adegbie Folajimi Festus
Investors’ confidence is an invaluable form of legitimacy that firms strive to attain because of its enduring influence on the sustainability and continuity of business operations. However, achieving the desired level of investors’ confidence among listed companies in Nigeria remains a complex and challenging phenomenon, given persistent issues such as lack of transparency, weak market-to-book ratios, poor dividend payout ratios, and perceived information asymmetry, all of which hinder the investors’ confidence in listed firms. Prior studies have demonstrated that adequate and consistent corporate financial reporting quality can mitigate these challenges and help rebuild investors’ confidence. Consequently, this study examined the effect of corporate financial reporting quality (CFRQ) on investors’ confidence, measured using the market-to-book ratio (MTBR) and dividend payout ratio (DPOR). The study adopted an ex post facto research design and relied on secondary data extracted from the audited financial statements of listed companies. A total of 20 listed companies were purposively selected over a 15-year period spanning 2009–2024. Panel regression analysis revealed that CFRQ had a joint significant effect on MTBR (Adj. R² = 0.236; F(5, 294) = 17.42; p = 0.000) and also a joint significant effect on DPOR (Adj. R² = 0.166; F(5, 294) = 22.72; p = 0.000). The study concluded that corporate financial reporting quality significantly enhances investors’ confidence in listed companies in Nigeria. It therefore recommended that managers prioritize efforts aimed at improving the credibility, transparency, and reliability of corporate financial reporting in order to deepen investors’ confidence.