Financial Reporting Standards and Practices have in the recent past come under great criticisms, demanding that accountants take further steps in ensuring that the true and fair view of the actual worth of business are also incorporated in the financial statements published by them. This was triggered off by an unpresedented line up of corporate failures like that of Enron Corporation, World.com and others coupled with the emergence of the global economic crisis. In Nigeria also, corporate failures and distresses have been witnessed in the banking sector. Evidence was the huge collapse of the Cooperative and Commerce Bank (CCB), Orient Bank of Nigeria, African Continental Bank (ACB) all due to massive accounting related frauds. This problem resulted in the establishment of Asset Management Company of Nigeria (AMCON) to prevent corporate failures particularly in the Nigeria banking sector by acquiring and financially distress companies. This paper is a critical investigation on the degree of reliance of the published financial statements by corporate investors. The study employed survey research design by which data were generated by means of questionnaire administered on one hundred and fifty corporate investors and senior management officials of the selected banks. The descriptive statistics and percentage analysis were used for the data analysis and the hypotheses were tested using t-test statistic. The statistical package for social sciences (SPSS) software version 17.0 was employed in the analysis of data and test of hypotheses. The results reveal that one of the primary responsibility of management to the investors is to give a standardized financial statement evaluated and authenticated by a qualified auditor or financial experts (tcal (16.59) > tcritical (2.353). p < 0.05). It also showed investors do understand the financial statement well before investment decision (tcal (17.306) > tcritical (2.353). p < 0.05). The results of the analysis also indicated that investors depend heavily on the credibility of auditors/financial expert approval of financial statement in making investment decisions (tcal (4.592) > tcritical (2.353). p < 0.05) and as such published financial statement is very important in the investors’ decision making (tcal 74.500 > tcritical 6.314; p < 0.05). It hereby recommended that adequate care and due diligence should be maintained in preparing financial statements to avoid faulty investment decisions which could lead to loss of funds and possible litigations
Keywords: Banking Sector, Decision Making, Financial Statements, Investments, Nigeria
