In today’s rapidly evolving and uncertain economic environment, financial data plays a central role in shaping investment decisions. The reliability and transparency of financial disclosures are essential for investors, regulators, and analysts in evaluating corporate performance, forecasting future outcomes, and making informed resource allocation decisions. However, variations in the quality and transparency of financial statements across firms and regions raise concerns about the credibility of publicly available financial information. This issue is particularly pronounced in developing economies such as Nigeria, where regulatory enforcement may be inconsistent and disclosure practices uneven. In such contexts, transparent financial reporting becomes critical in reducing investor uncertainty and strengthening confidence in the financial system.
Market instability, commonly captured through stock price volatility, reflects the degree of variation in a firm’s share price over time. While a certain level of volatility is expected in capital markets, excessive fluctuations can discourage long-term investment, distort risk assessment, and reduce market efficiency. Evidence suggests that such volatility is often driven by information asymmetry, where some market participants possess superior or more timely information than others. This imbalance can trigger speculative trading, herd behavior, and price movements that do not accurately reflect a firm’s underlying value. Therefore, improving financial statement transparency may play a key role in reducing information asymmetry and stabilizing stock price movements in emerging markets like Nigeria