Abstract
Due to investor dependence on subjective estimations that worsen information asymmetry and result in economic inequities, fair value accounting significantly increases the volatility of financial statements. Therefore, the study tends to examine the relationship between fair value accounting and the socio-economic environment in Nigeria. Used descriptive and exploratory research designs and utilized primary data through a structured questionnaire. The population consists of 300 accountants, auditors, and financial analysts employed in the banking and manufacturing of Ondo State. A minimum of 250 respondents with professional qualifications are sampled for the study. Regression analysis was performed to find relationships between fair value accounting and the socio-economic environment in Nigeria. The finding of this study revealed that accounting standards and regulatory frameworks significantly influence fair value accounting and the socio-economic environment in Nigeria. At the same time, economic policies have in significant influence on fair value accounting and the socio-economic environment in Nigeria. The study concludes that the stability of the economy as well as investment behaviour are impacted by volatility. Although fair value accounting makes financial reporting more timely and relevant, its effects on the socioeconomic context must be carefully considered. Regulators, standard-setters, and stakeholders must continuously evaluate and improve the framework to strike a balance between the potential for market distortion and inequity and the need for transparency. The study makes the following recommendations: entities should disclose how fair value estimates are sensitive to changes in market conditions and underlying assumptions to provide insight into the potential impact of market volatility on financial statements; regulators and policymakers should provide additional support and resources for smaller entities to manage the costs and complexities associated with fair value accounting.
Published Version
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