Financial Statement Analysis and Investment Decision-Making Among Retail Investors in Enugu State

The capacity of retail investors to interpret and apply financial statement information in their investment decision-making processes is critical to the development of an informed investor class in Nigeria, yet financial literacy gaps continue to limit the effective use of published accounts by non-institutional investors. This study examined the relationship between financial statement analysis competence and investment decision-making among retail investors in Enugu State. The study was anchored on the rational choice theory, which assumes that investors make decisions by evaluating available financial information to maximize expected utility. A survey research design was adopted, with a population of 415 retail investors registered with stockbroking firms and investment clubs in Enugu State. A sample of 201 respondents was drawn using systematic random sampling. A validated questionnaire covering financial ratio interpretation, trend analysis, and investment decision patterns was administered. Data were analyzed using Pearson correlation, logistic regression, and descriptive statistics. Findings revealed that proficiency in ratio analysis and cash flow interpretation were positively and significantly associated with the likelihood of making informed investment decisions, while over-reliance on market rumors was negatively associated with decision quality. The study concluded that improving retail investors' financial statement analysis skills directly enhances their decision-making quality. It was recommended that the Nigerian Exchange Group should partner with professional accounting bodies to deliver free financial literacy workshops for retail investors in state capitals.

Keywords: Financial statement analysis, investment decision-making, retail investors, rational choice theory, financial literacy