Value Relevance of Fair Value Measurement on Investment Property: Malaysian Evidence

Abstract

Objective - This research investigates the disclosure practices for fair value measurement of investment property and examines the value relevance of fair value information reported by Malaysian public listed companies. Methodology/Technique - The study focuses on annual reports from 2018 of companies listed on the Main Market of Bursa Malaysia, excluding firms in the financial and unit trust sectors. The sample includes 71 companies that reported fair value gains on investment property. Findings - Findings reveal that none of the companies used Level 1 inputs, 51% used Level 2 inputs, 39% used Level 3 inputs, and 10% used a combination of Level 2 and 3 inputs. The regression analysis indicates that fair value gains are not significantly related to stock returns, suggesting that Malaysian investors do not find this information useful. However, net income before fair value gains is significantly related to share returns, highlighting the importance of traditional earnings metrics. Novelty - This study contributes to the literature by providing empirical evidence from Malaysia, revealing a gap in the perceived usefulness of fair value disclosures and underscoring the continued relevance of traditional financial metrics for investors. Type of Paper: Empirical JEL Classification: M41, M49. Keywords: Fair Value Gain, Investment Property, Value Relevance, Disclosure Reference to this paper should be referred to as follows: Shaari, H. (2024). Value Relevance of Fair Value Measurement on Investment Property: Malaysian Evidence, Acc. Fin. Review, 9(1), 42 – 53. https://doi.org/10.35609/afr.2024.9.1(2)