Abstract
This study examined the impact of fair value accounting on corporate reporting in Nigeria. The primary data used were gathered through a well-structured questionnaire, designed and administered to 120 respondents, who are made up of accountants, auditors, bankers, financial experts and practitioners in Lagos State, Nigeria. We adopted the logistic regression approach in analyzing the research questions. We found that fair value accounting has impact on corporate reporting. The Cox and Snell’s R-Square revealed that 67.1% of the variation in the corporate reporting was explained by the logistic model. We further found a moderate strong relationship between the fair value accounting and corporate reporting. Based on this finding, the study concluded that the used of fair value helped in predicting the earnings and assessment of the amounts, timing and uncertainty of future cash flows in corporate reporting which dependent on its reliability. However, institutional factors played an essential role in enhancing the reliability of discretionary fair value estimates which in return increased the informativeness of accounting information in corporate reporting.
Highlights
Fair value accounting is a financial reporting approach in which companies are required or permitted to measure and report the existing financial instruments based on certain estimated prices of an asset and liability received, implies the estimated prices received for selling the assets or pay for relieved liabilities (Ryan, 2008)
A thorough examination of the impact of fair value accounting on corporate reporting revealed that it enhanced corporate reporting as shown by the classification table
The study established that fair value accounting has significant impact on corporate reporting as revealed by the Wald statistic and associated probabilities
Summary
Fair value accounting is a financial reporting approach in which companies are required or permitted to measure and report the existing financial instruments based on certain estimated prices of an asset and liability received, implies the estimated prices received for selling the assets or pay for relieved liabilities (Ryan, 2008). Obazee (2009) identified some basic issues affecting the fair value accounting implementation in Nigeria These includes: traded government and corporate bonds; model valuation development expert; complex valuations for fair value of Foreign Exchange Contracts measurement; Cross Currency swaps of Interest Rate and the regulators will that allow measurement of fair value for financial instruments of entities. The study identified conditional changes in economic and entity’s activities that are reflected in the financial statements during the period It was further discovered in measurement of accounting basis that fair value provides better economic volatility than any other based on historical measured
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