Fair Value Accounting and Reporting, and Firm Value: Evidence from Quoted Deposit Money Banks in Nigeria

Main Article Content

Abiahu, Mary-Fidelis Chidoziem
Udeh, Francis Nnoli
Okegbe, Theophilus Okonkwo
Eneh, Onyinye Maria-Regina


The study evaluated the effect of fair value reporting on financial profitability and firm value with focus on deposit money banks listed on the Nigerian Stock Exchange Using a sample of 13 banks quoted on the Exchange, the study employed secondary data gathered from published annual reports of eight years (four years pre-IFRS, historical value measurement and four years post-IFRS fair value measurement) 2008 to 2015. The study was anchored on the agency theory while descriptive analysis was employed to summarize data collected while SPSS Version 23 software and regression analysis were used to analyze data. The result support the hypothesis that fair value reporting does not significantly affect reported profitability. Fair value was however found to affect firm valuation. Overall, this study suggests that he study concludes that in order to effectively evaluate financial performance and position, knowledge of fair value is not enough. Users also need to know the historical cost of the investment. Therefore, companies should adopt a hybrid form of measurement (measurements which entail both fair and historical values) in reporting their activities to reflect actual value creation.

Fair value, financial instruments, firm value, historical cost, profitability

Article Details

How to Cite
Chidoziem, A. M.-F., Nnoli, U. F., Okonkwo, O. T., & Maria-Regina, E. O. (2020). Fair Value Accounting and Reporting, and Firm Value: Evidence from Quoted Deposit Money Banks in Nigeria. Asian Journal of Economics, Business and Accounting, 17(1), 46-53. https://doi.org/10.9734/ajeba/2020/v17i130253
Original Research Article


Abiahu MC, Udeh FN, Ogbekhilu ME. Modelling the correlation between shareholders dividends and corporate performance in Nigeria. Journal of Modern Accounting and Auditing. 2018;14(10):570-581.

DOI: 10.17265/1548-6583/2018.10.004

Adegboyegun AE, Ben-Caleb E, Ademola AO, Madugba JU, Eluyela DF. Fair value accounting and corporate reporting in Nigeria: A logistics regression approach. International Journal of Financial Research. 2020;11(2):301-310.

Akwu OD. Examination of fair value measurement in determination of profitability of listed manufacturing firms in Nigeria, M.Sc. Dissertation at University of Nigeria, Nsukka; 2014.

Ijeoma NB. The impact of fair value measurement on financial instrument of firms in Nigeria, International Journal of Advancements in Research & Technology. 2013;2(11):90-96.

Nordlund B, Persson E. accounting for investment property at fair value according to IAS 40 Fair value model. In 10th European Real Estate Society Conference. ERES: Conference. Helsinki, Finland; 2003.

International Accounting Standard Board. Conceptual framework for Financial Reporting; 2010.


Enahoro J, Jayeoba J. Value measurement and disclosures in fair value accounting, Asian Economic and Financial Review. 2013;3(9):1170-1179.

Ting YS, Soo CM. Fair value accounting – Relevance, reliability and progress in Malaysia; 2005.

Osisioma BC, Okoye EI, Ijeoma BN. A model for implementation of fair value accounting in corporate financial reporting. SOP Transactions on Economic Research. 2014;1(2).

Nissim D, Penman S. Principles for the application of fair value accounting, center for excellence in accounting and security analysis, Columbia Business School; 2008.

Penman S. Financial reporting quality: Is fair value a plus or a minus? Accounting and Business Research, International Accounting Policy Forum. 2007;37(1):33–44.

Benston GJ. Fair-value accounting: A cautionary tale from enron, Journal of Accounting & Public Policy. 2006;25(1): 465-484.

Topping M. Enron highlights the fair value accounting problems. Financial Products. 2002;5(5):6-12.

International Accounting Standard Board (IASB). IFRS 13-Fair Value Measurement. IFRS Foundation Publications Department, United Kingdom, London; 2011.

International Accounting Standard Board, IFRS 13 Technical Summary; 2012.

Gautam M, Arjun G. Reporting of derivative financial instruments: A conceptual framework of Fair Value Accounting Standards. Journal of Research Innovation and Management. 2015;24-32.

Institute of Chartered Accountants of Nigeria. Financial Accounting Study Pack. Berkshire, United Kingdom: Emile Woolf International; 2014.

Plantin G, Sapra H, Shin H. Marking to market, liquidity, and financial Stability. Monetary and Economic Studies; 2005.

Barth ME, Beaver WH, Landsman WR. The relevance of the value relevance literature for financial accounting standard setting: Another view. Journal of Accounting and Economics. 2001;31:77-104.

Song CJ, Thomas WB, Han Y. Value relevance of FAS 157 fair value hierarchy information and the impact on corporate governance mechanisms. The Accounting Review. 2010;85(4):1375-1410.

Armstrong CS, Guay WR, Weber JP. The role of information and financial reporting in corporate governance and debt contracting. Journal of Accounting and Economics. 2010;50:179-234.

Yuan M, Liu H. The economic consequences of fair value accounting. Accounting, Economics and Law. 2011; 1(2):Article 1.

Egbunike FC, Abiahu MC. Audit firm report and financial performance of money deposit banks in Nigeria. The Nigerian Accountant. 2017;50(1):25-39.


Jensen MC, Meckling WH. Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Finance and Economics. 1976;305- 360.

Okaro SC, Okafor GO, Okoye EI. Corporate governance and audit quality. Conference Proceedings of 1st Academic Conference of Accounting and Finance of the Institute of Chartered Accountants of Nigeria. Lagos. 2015;102-122.


Udeh FN, Abiahu MC, Tambou LE. Impact of corporate governance on firm’s financial performance: A study of quoted banks in Nigeria. The Nigerian Accountant. 2017; 50(2):54-62.

Okafor C, Ogiedu KO. Potential effects of adoption and implementation of IFRS in Nigeria. Jorind. 2011;9(2).

Ijeoma NB. The contribution of fair value accounting on corporate financial reporting in Nigeria. American Journal of Business, Economics and Management. 2014;2(1): 1–8.

Akpaka NC. International Financial Reporting Standards (IFRS) Adoption and value relevance of Financial Information of Listed Deposit Money Banks in Nigeria, A Thesis Submitted to Ahmade Bello University, Zaria; 2015.

Sanyaolu OA, Iyoha FO, Ojeka SA. International financial reporting standards adoption and earnings of quoted banks in Nigeria. International Journal of Economics and Financial Issues. 2017;7(1):279-284.

Ibidunnia O, Okere W. Fair value accounting and reliability of accounting information of listed firms in Nigeria. Accounting 2019;5(3):91–100.

DOI: 10.5267/j.ac.2018.9.004

Osho AE, Ajetunmobi TP. Justifying the concept of fair value as a theory through International Financial Reporting Standard (IFRS). Research Journal of Finance and Accounting. 2018;9(18):31-39.

Lin Y, Lin S, Fornaro JM, Huang HS. Fair value measurement and accounting restatements. Advances in accounting, Elsevier. 2017;38(C):30-45.

Barth ME, Landsman WR. Using fair value earnings to assess firm value. Stanford University Graduate School of Business Research Paper No. 18-7; 2018.