Moderating Role of Leverage on the Relationship Between Business Models and Value Relevance of Accounting Information
Keywords:
Value Relevance, Accounting Information, Market Capitalization, Business Models, Share Price.
Abstract
This study examines the moderating role of leverage on the relationship between business models and the value relevance of accounting information in Nigerian firms. Using a sample of 70 firms listed on the Nigerian Exchange Group, the study employs regression analysis to assess the impact of various leverage metrics (Debt-to-Equity Ratio, Debt-to-Total Assets, and Long-Term Debt-to-Equity Ratio) on the relationship between business models and stock performance, with market capitalization as a control variable. The findings reveal that business models alone do not significantly impact stock performance. However, their interaction with leverage variables provides deeper insights. Specifically, the study finds that Long-Term Debt-to-Equity Ratio has a strong negative effect on share price, indicating that excessive reliance on long-term debt signals financial distress, leading to lower investor confidence. Conversely, market capitalization exhibits a significant positive relationship with stock performance, suggesting that larger firms are perceived as more stable and less risky. Additionally, the interaction between business models and Debt-to-Equity Ratio positively influences stock performance, highlighting the importance of an effective business model in leveraging capital structure efficiently. However, the interaction between business models and Long-Term Debt-to-Equity Ratio (-0.2928, p-value = 0.000) negatively impacts stock performance, further reinforcing the risks associated with excessive long-term debt, regardless of business model effectiveness. The study recommends that firms manage their financial structures carefully, particularly reducing long-term debt while optimizing their business models for market adaptation and operational efficiency. Policymakers should create an enabling environment for firms to scale operations by offering financial incentives, improving regulatory frameworks, and enhancing access to capital markets.
Downloads
Download data is not yet available.
References
Abideen, A. Z., Pyeman, J., Sundram, V. P. K., Tseng, M. L., &Sorooshian, S. (2021). Leveraging capabilities of technology into a circular supply chain to build circular business models: A state-of-the-art systematic review. Sustainability, 13(16), 8997.
Abuaja, H., & Ukpong, E. G. (2022). Value relevance of sustainability reporting: Evidence from listed oil and gas firms in Nigeria. AKSU Journal of Administration and Corporate Governance (AKSUJACOG), 2(1), 8-22.
Abubakar, S., & Abubakar, M. (2015). Intangible assets and value relevance of accounting information of listed high-tech firms in Nigeria. Research Journal of Finance and Accounting, 6(11), 60-79.
Acciarini, C., Cappa, F., Boccardelli, P., & Oriani, R. (2023). How can organizations leverage big data to innovate their business models? A systematic literature review. Technovation, 123, 102713
Alzubi, K., & Bani-Hani, A. (2021). Determinants of debt-to-equity and its impact on the performance of industrial companies listed on Amman stock exchange. Journal of Governance and Regulation, 10(4) 353-364.
Amedu, J. M., Iliemena, R. O., &Umaigba, F. T. (2019). Value relevance of sustainability reporting in Nigerian manufacturing companies. Journal of Global Accounting, 6(2), 131-147.
Baboukardos, D., & Rimmel, G. (2016). Value relevance of accounting information under an integrated reporting approach: A research note. Journal of Accounting and Public policy, 35(4), 437-452.
Bhatia, M., & Mulenga, M. J. (2019). Value relevance of accounting information: A review of empirical evidence across continents. Jindal Journal of Business Research, 8(2), 179-193.
Bustani, B., Kurniaty, K., &Widyanti, R. (2021). The effect of earning per share, price to book value, dividend payout ratio, and net profit margin on the stock price in Indonesia stock exchange. JurnalMaksipreneur: Manajemen, Koperasi, dan Entrepreneurship, 11(1), 1-18.
Bustos, O., & Pomares-Quimbaya, A. (2020). Stock market movement forecast: A systematic review. Expert Systems with Applications, 156, 113464.
Chowdhury, E. K., Dhar, B. K., & Stasi, A. (2022). Volatility of the US stock market and business strategy during COVID‐19. Business Strategy & Development, 5(4), 350-360.
Ebiaghan, O. F. (2017). Risk analysis of public-private partnership (PPP) projects. EBSU Journal of Social Sciences and Humanities, 4(1).
Forster, R., Lyons, A., Caldwell, N., Davies, J., & Sharifi, H. (2025). A lifecycle analysis of complex public procurement: an agency-institutional theory perspective. International Journal of Operations & Production Management, 45(1), 62-87.
Hafiz, M. M., Bagudo, M. M., & Abubakar, S. (2022). Value relevance of international financial reporting standard four of listed Nigerian insurance firms. Gusau Journal of Accounting and Finance, 3(1), 23-23.
Hasanuddin, R., Darman, D., Taufan, M. Y., Salim, A., Muslim, M., & Putra, A. H. P. K. (2021). The effect of firm size, debt, current ratio, and investment opportunity set on earnings quality: an empirical study in Indonesia. The Journal of Asian Finance, Economics and Business, 8(6), 179-188.
Huy, D. T. N., Nhan, V. K., Bich, N. T. N., Hong, N. T. P., Chung, N. T., & Huy, P. Q. (2021). Impacts of internal and external macroeconomic factors on firm stock price in an expansion econometric model—a case in Vietnam real estate industry. Data Science for Financial Econometrics, 189-205.
Ibrahim, U. A., & Isiaka, A. (2020). Effect of financial leverage on firm value: Evidence from selected firms quoted on the Nigerian stock exchange. European Journal of Business and Management, 12(3), 124-135.
Ibrahim, M., & Yaya, O. (2020). Corporate governance and the value relevance of financial information: Evidence from Nigerian listed firms. Journal of Financial Reporting and Accounting, 18(3), 345-362.
Innocent, O., Ibanichuka, E. A. L., & Micah, L. C. (2020). Accounting information and stock prices of quoted manufacturing firms: Multi-variant panel data evidence from Nigeria. Asian Finance & Banking Review, 4(1), 1-16.
Inrawan, A., Sembiring, L. D., &Loist, C. (2025). The Moderating Role of Liquidity in the Relationship between Leverage, Firm Size, and Profitability. International Journal of Business, Law, and Education, 6(1), 54-68.
Jeroh, E. (2012). Interest rate variations and stock market capitalization in Nigeria: an empirical analysis. Acta Universitatis Danubius. Œconomica, 8(5), 5-14.
Jeroh, E. (2020). Corporate financial attributes and the value of listed financial service firms: The Nigerian evidence. Academy of Accounting and Financial Studies Journal, 24(2), 1-13.
Jihadi, M., Vilantika, E., Hashemi, S. M., Arifin, Z., Bachtiar, Y., &Sholichah, F. (2021). The effect of liquidity, leverage, and profitability on firm value: Empirical evidence from Indonesia. The Journal of Asian Finance, Economics and Business, 8(3), 423-431.
Khaldi, H., & Hamama, F. (2024). Value relevance of accounting information in uncertain economic policy context: Evidence from Tunisia. Journal of Accounting and Management Information Systems, 23(3), 570-595.
Lestari, E. (2023). Debt to equity ratio (DER) and firm size toward firm value: the mediating role of return on asset. Return: Study of Management, Economic and Business, 2(11), 1095-1109.
Macgregor, T. C., &Ibanichuka, E. (2021). Accounting Information Quality and Firm Performance of Quoted Oil and Gas Companies in Nigeria. International Journal of Advanced Academic Research, 7 (6) 1-24.
Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American journal of sociology, 83(2), 340-363.
Moro-Visconti, R. (2025). From business models to business planning. In Startup Valuation: From Strategic Business Planning to Digital Networking. Cham: Springer Nature Switzerland, 21-80
Ngatno, Apriatni, E. P., &Youlianto, A. (2021). Moderating effects of corporate governance mechanism on the relation between capital structure and firm performance. Cogent Business & Management, 8(1), 1866822.
Nukala, V. B., & Prasada Rao, S. S. (2021). Role of debt-to-equity ratio in project investment valuation, assessing risk and return in capital markets. Future Business Journal, 7(1), 13.
Odhiambo, A., Koske, N., & Limo, P. (2022). Debt-Equity Ratio, CEO Power and Financial Performance of Listed Companies at the Nairobi Securities Exchange, Kenya. European Journal of Business and Management Research, 7(2), 330-338.
Ogieh, A. S., &Jeroh, E. (2022). Corporate governance and the value relevance of earnings. Himalayan Journal of Economics and Business Management, 3(5), 55-63.
Oryina, E., & Suleiman, S. (2020). Effect of intangible assets on value relevance: evidence from listed manufacturing firms in Nigeria. Journal of Economics and Sustainability, 2(2), 13-13.
Otiedhe, M. G., &Jeroh, E. (2022). Value relevance of accounting information of quoted Nigerian firms in the industrial goods sector: assessment of the pre-and post-IFRS era. Finance & Accounting Research Journal, 4(5), 296-309.
Onyinye, N. P., &Ebiaghan, O. F. (2023). Off-Balance Sheet (Non-Financial) information disclosures and financial performance of quoted firms in the Nigerian industrial sector. Gulf Journal of Advance Business Research, 1(1), 73-81.
Rabberti, R., &Hariyanto, D. (2024). The Influence of Return on Asset, Debt to Total Asset Ratio, and Economic Value Added, on Company Value with Dividends as a Moderating Variable in Industrial Sector Companies. International Journal Papier Public Review, 5(4), 55-67.
Salim, G. (2023). The influence of debt-to-equity ratio, capital intensity ratio, and profitability on effective tax rate in the tourism sector. J. Gov. Regul, 12(1), 53–67.
Salsabila, W. G., Putri, A., & Mohammad, W. (2023). The Effect of Debt-to-Equity Ratio (DER) and Current Ratio (CR) on Return on Equity (ROE) in the Food and Beverage Companies. Himeka: Journal of Interdisciplinary Social Sciences, 1(1), 1-12.
Sinebe, M.T. (2023). Firm Performance and Dividend Policy: Evidence from Listed Service Firms in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 4(6), 129-139.
Sinebe M.T. &Jeroh, E. (2023). Corporate governance and financial statements’ fraud: Evidence from listed firms in Nigeria. Asian Journal of Management and Commerce, 4 (2) 118-123.
Sinebe, M. T. (2024). Board Composition and Market Valuations in Nigeria. Journal of the Management Sciences, 61(6), 35–46.
Srivastava, A., &Muharam, H. (2022). Value relevance of accounting information during IFRS convergence period: Comparative evidence between India and Indonesia. Accounting Research Journal, 35(2), 276-291.
Sulaiman, A. S., & Khalid, K. M. (2024). Moderating effect of firm size on debt capital and financial performance of listed agricultural firms in Nigeria. FULafia International Journal of Business and Allied Studies, 2(1), 91-106.
Teece, D. J. (2018). Business models and dynamic capabilities. Long range planning, 51(1), 40-49.
Ugboduma, J., &Ebiaghan, F. O. (2023). An assessment of the nexus between working capital management and financial performance: Nigerian evidence. Gulf Journal of Advance Business Research, 1(2), 174-187.
Utama, S., Purmono, B. B., Malini, H., Mustarudin, M., & Wendy, W. (2023). The influence of debt equity ratio and times interest earned ratio through return on assets on banking companies’ share price. International Journal of Applied Finance and Business Studies, 11(3), 418-429.
Yanto, E., Christy, I., &Cakranegara, P. A. (2021). The influences of return on asset, return on equity, net profit margin, debt equity ratio and current ratio toward stock price. International Journal of Science, Technology & Management, 2(1), 300-312.
Abuaja, H., & Ukpong, E. G. (2022). Value relevance of sustainability reporting: Evidence from listed oil and gas firms in Nigeria. AKSU Journal of Administration and Corporate Governance (AKSUJACOG), 2(1), 8-22.
Abubakar, S., & Abubakar, M. (2015). Intangible assets and value relevance of accounting information of listed high-tech firms in Nigeria. Research Journal of Finance and Accounting, 6(11), 60-79.
Acciarini, C., Cappa, F., Boccardelli, P., & Oriani, R. (2023). How can organizations leverage big data to innovate their business models? A systematic literature review. Technovation, 123, 102713
Alzubi, K., & Bani-Hani, A. (2021). Determinants of debt-to-equity and its impact on the performance of industrial companies listed on Amman stock exchange. Journal of Governance and Regulation, 10(4) 353-364.
Amedu, J. M., Iliemena, R. O., &Umaigba, F. T. (2019). Value relevance of sustainability reporting in Nigerian manufacturing companies. Journal of Global Accounting, 6(2), 131-147.
Baboukardos, D., & Rimmel, G. (2016). Value relevance of accounting information under an integrated reporting approach: A research note. Journal of Accounting and Public policy, 35(4), 437-452.
Bhatia, M., & Mulenga, M. J. (2019). Value relevance of accounting information: A review of empirical evidence across continents. Jindal Journal of Business Research, 8(2), 179-193.
Bustani, B., Kurniaty, K., &Widyanti, R. (2021). The effect of earning per share, price to book value, dividend payout ratio, and net profit margin on the stock price in Indonesia stock exchange. JurnalMaksipreneur: Manajemen, Koperasi, dan Entrepreneurship, 11(1), 1-18.
Bustos, O., & Pomares-Quimbaya, A. (2020). Stock market movement forecast: A systematic review. Expert Systems with Applications, 156, 113464.
Chowdhury, E. K., Dhar, B. K., & Stasi, A. (2022). Volatility of the US stock market and business strategy during COVID‐19. Business Strategy & Development, 5(4), 350-360.
Ebiaghan, O. F. (2017). Risk analysis of public-private partnership (PPP) projects. EBSU Journal of Social Sciences and Humanities, 4(1).
Forster, R., Lyons, A., Caldwell, N., Davies, J., & Sharifi, H. (2025). A lifecycle analysis of complex public procurement: an agency-institutional theory perspective. International Journal of Operations & Production Management, 45(1), 62-87.
Hafiz, M. M., Bagudo, M. M., & Abubakar, S. (2022). Value relevance of international financial reporting standard four of listed Nigerian insurance firms. Gusau Journal of Accounting and Finance, 3(1), 23-23.
Hasanuddin, R., Darman, D., Taufan, M. Y., Salim, A., Muslim, M., & Putra, A. H. P. K. (2021). The effect of firm size, debt, current ratio, and investment opportunity set on earnings quality: an empirical study in Indonesia. The Journal of Asian Finance, Economics and Business, 8(6), 179-188.
Huy, D. T. N., Nhan, V. K., Bich, N. T. N., Hong, N. T. P., Chung, N. T., & Huy, P. Q. (2021). Impacts of internal and external macroeconomic factors on firm stock price in an expansion econometric model—a case in Vietnam real estate industry. Data Science for Financial Econometrics, 189-205.
Ibrahim, U. A., & Isiaka, A. (2020). Effect of financial leverage on firm value: Evidence from selected firms quoted on the Nigerian stock exchange. European Journal of Business and Management, 12(3), 124-135.
Ibrahim, M., & Yaya, O. (2020). Corporate governance and the value relevance of financial information: Evidence from Nigerian listed firms. Journal of Financial Reporting and Accounting, 18(3), 345-362.
Innocent, O., Ibanichuka, E. A. L., & Micah, L. C. (2020). Accounting information and stock prices of quoted manufacturing firms: Multi-variant panel data evidence from Nigeria. Asian Finance & Banking Review, 4(1), 1-16.
Inrawan, A., Sembiring, L. D., &Loist, C. (2025). The Moderating Role of Liquidity in the Relationship between Leverage, Firm Size, and Profitability. International Journal of Business, Law, and Education, 6(1), 54-68.
Jeroh, E. (2012). Interest rate variations and stock market capitalization in Nigeria: an empirical analysis. Acta Universitatis Danubius. Œconomica, 8(5), 5-14.
Jeroh, E. (2020). Corporate financial attributes and the value of listed financial service firms: The Nigerian evidence. Academy of Accounting and Financial Studies Journal, 24(2), 1-13.
Jihadi, M., Vilantika, E., Hashemi, S. M., Arifin, Z., Bachtiar, Y., &Sholichah, F. (2021). The effect of liquidity, leverage, and profitability on firm value: Empirical evidence from Indonesia. The Journal of Asian Finance, Economics and Business, 8(3), 423-431.
Khaldi, H., & Hamama, F. (2024). Value relevance of accounting information in uncertain economic policy context: Evidence from Tunisia. Journal of Accounting and Management Information Systems, 23(3), 570-595.
Lestari, E. (2023). Debt to equity ratio (DER) and firm size toward firm value: the mediating role of return on asset. Return: Study of Management, Economic and Business, 2(11), 1095-1109.
Macgregor, T. C., &Ibanichuka, E. (2021). Accounting Information Quality and Firm Performance of Quoted Oil and Gas Companies in Nigeria. International Journal of Advanced Academic Research, 7 (6) 1-24.
Meyer, J. W., & Rowan, B. (1977). Institutionalized organizations: Formal structure as myth and ceremony. American journal of sociology, 83(2), 340-363.
Moro-Visconti, R. (2025). From business models to business planning. In Startup Valuation: From Strategic Business Planning to Digital Networking. Cham: Springer Nature Switzerland, 21-80
Ngatno, Apriatni, E. P., &Youlianto, A. (2021). Moderating effects of corporate governance mechanism on the relation between capital structure and firm performance. Cogent Business & Management, 8(1), 1866822.
Nukala, V. B., & Prasada Rao, S. S. (2021). Role of debt-to-equity ratio in project investment valuation, assessing risk and return in capital markets. Future Business Journal, 7(1), 13.
Odhiambo, A., Koske, N., & Limo, P. (2022). Debt-Equity Ratio, CEO Power and Financial Performance of Listed Companies at the Nairobi Securities Exchange, Kenya. European Journal of Business and Management Research, 7(2), 330-338.
Ogieh, A. S., &Jeroh, E. (2022). Corporate governance and the value relevance of earnings. Himalayan Journal of Economics and Business Management, 3(5), 55-63.
Oryina, E., & Suleiman, S. (2020). Effect of intangible assets on value relevance: evidence from listed manufacturing firms in Nigeria. Journal of Economics and Sustainability, 2(2), 13-13.
Otiedhe, M. G., &Jeroh, E. (2022). Value relevance of accounting information of quoted Nigerian firms in the industrial goods sector: assessment of the pre-and post-IFRS era. Finance & Accounting Research Journal, 4(5), 296-309.
Onyinye, N. P., &Ebiaghan, O. F. (2023). Off-Balance Sheet (Non-Financial) information disclosures and financial performance of quoted firms in the Nigerian industrial sector. Gulf Journal of Advance Business Research, 1(1), 73-81.
Rabberti, R., &Hariyanto, D. (2024). The Influence of Return on Asset, Debt to Total Asset Ratio, and Economic Value Added, on Company Value with Dividends as a Moderating Variable in Industrial Sector Companies. International Journal Papier Public Review, 5(4), 55-67.
Salim, G. (2023). The influence of debt-to-equity ratio, capital intensity ratio, and profitability on effective tax rate in the tourism sector. J. Gov. Regul, 12(1), 53–67.
Salsabila, W. G., Putri, A., & Mohammad, W. (2023). The Effect of Debt-to-Equity Ratio (DER) and Current Ratio (CR) on Return on Equity (ROE) in the Food and Beverage Companies. Himeka: Journal of Interdisciplinary Social Sciences, 1(1), 1-12.
Sinebe, M.T. (2023). Firm Performance and Dividend Policy: Evidence from Listed Service Firms in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 4(6), 129-139.
Sinebe M.T. &Jeroh, E. (2023). Corporate governance and financial statements’ fraud: Evidence from listed firms in Nigeria. Asian Journal of Management and Commerce, 4 (2) 118-123.
Sinebe, M. T. (2024). Board Composition and Market Valuations in Nigeria. Journal of the Management Sciences, 61(6), 35–46.
Srivastava, A., &Muharam, H. (2022). Value relevance of accounting information during IFRS convergence period: Comparative evidence between India and Indonesia. Accounting Research Journal, 35(2), 276-291.
Sulaiman, A. S., & Khalid, K. M. (2024). Moderating effect of firm size on debt capital and financial performance of listed agricultural firms in Nigeria. FULafia International Journal of Business and Allied Studies, 2(1), 91-106.
Teece, D. J. (2018). Business models and dynamic capabilities. Long range planning, 51(1), 40-49.
Ugboduma, J., &Ebiaghan, F. O. (2023). An assessment of the nexus between working capital management and financial performance: Nigerian evidence. Gulf Journal of Advance Business Research, 1(2), 174-187.
Utama, S., Purmono, B. B., Malini, H., Mustarudin, M., & Wendy, W. (2023). The influence of debt equity ratio and times interest earned ratio through return on assets on banking companies’ share price. International Journal of Applied Finance and Business Studies, 11(3), 418-429.
Yanto, E., Christy, I., &Cakranegara, P. A. (2021). The influences of return on asset, return on equity, net profit margin, debt equity ratio and current ratio toward stock price. International Journal of Science, Technology & Management, 2(1), 300-312.
Published
2025-03-23
How to Cite
Sinebe, M. T., Jeroh, E., & Ebiaghan, F. O. (2025). Moderating Role of Leverage on the Relationship Between Business Models and Value Relevance of Accounting Information. GPH-International Journal of Business Management, 8(03), 17-31. https://doi.org/10.5281/zenodo.15073089
Section
Articles
Copyright (c) 2025 Michael T. Sinebe, Edirin Jeroh, Frank O. Ebiaghan
The authors and co-authors warrant that the article is their original work, does not infringe any copyright, and has not been published elsewhere. By submitting the article to GPH-International Journal of Business Management, the authors agree that the journal has the right to retract or remove the article in case of proven ethical misconduct.
