Financial Reporting Quality and Financial Performance of Small and Medium-Sized Enterprises in Oyo State

This study examined the effect of financial reporting quality on the financial performance of Small and Medium-Sized Enterprises (SMEs) in Oyo State, Nigeria. The study was motivated by the growing recognition that the survival, profitability, and long-term sustainability of SMEs depend not only on statutory compliance but on the credibility, accuracy, and usefulness of the financial information available to owners and managers. The study is anchored on Institutional Theory, which explains how organisational conformity to the preparation of accurate, standards-compliant, transparent, and well-documented financial reports translates into improved firm-level outcomes. A survey research design was adopted within a quantitative framework, and a structured, close-ended questionnaire built on a five-point Likert scale was administered to 400 owners, managers, accountants, and finance officers of registered SMEs operating in Oyo State. Data collected were analysed using descriptive statistics and simple regression analysis. The findings revealed that financial reporting quality has a positive and statistically significant effect on the financial performance of SMEs in Oyo State, with the model explaining 64.2 per cent of the variation in financial performance. The study concludes that financial reporting quality is an important determinant of financial performance among SMEs in Oyo State. The study recommends that SME owners and managers invest in strengthening internal accounting and documentation systems, in collaboration with professional accounting bodies, SME support agencies, and private-sector partners, to expand access to affordable bookkeeping and financial-reporting training for SME operators.

Financial Reporting Quality; Performance; Small and Medium-Sized Enterprises; Institutional Theory; Oyo State

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