Assessment of Fair Value Accounting and Socio-Economic Environment in Nigeria: An Empirical Review
DOI:
https://doi.org/10.55677/GJEFR/03-2024-Vol01E7Keywords:
Fair value accounting, accounting standards, economic policies, regulatory framework, and socio-economic environmentAbstract
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.
References
Akpuokwe, C. U., Adeniyi, A. O., & Bakare, S. S. (2024). Legal challenges of artificial intelligence and robotics: a comprehensive review. Computer Science & IT Research Journal, 5(3), 544-561.
Akpuokwe, C. U., Adeniyi, A. O., Bakare, S. S., & Eneh, N. E. (2024). The impact of judicial reforms on legal systems: a review in African countries. International Journal of Applied Research in Social Sciences, 6(3), 198-211.
Alharasis, E. E., & Alkhwaldi, A. F. (2024). The implementation of advanced AIS and the accounting data quality: the case of Jordanian SMES. In International Conference on Human-Computer Interaction, 149-173.
Alharasis, E. E., Prokofieva, M., Clark, C., Haddad, H., & Alramahi, N. (2024). The development of international accounting and auditing standards for fair value accounting in the Arab Middle East, Jordan: a systematic review, Cogent Business & Management, 11(1), 1-17. DOI: 10.1080/23311975.2024.2391564
Bakare, S. S., Adeniyi, A. O., Akpuokwe, C. U., & Eneh, N. E. (2024). Data privacy laws and compliance: a comparative review of the EU GDPR and USA regulations. Computer Science & IT Research Journal, 5(3), 528 543.
Bar‐Hod, A., Chen, E., & Gavious, I. (2020). The economic consequences of fair value disclosures: A manifestation of the buried facts doctrine. Accounting & Finance, 61(s1), 1363-1413. ttps://doi.org/10.1111/acfi.12630.
Bolton, P., & Marcin, K., Kacperczyk, B. (2023), Accounting disclosure and the cost of capital. Working paper, Imperial College London.
Daniyan, A. A., Okonkwo, P. C., Ogundare, O. J., Oluwasegun, K. M., Umoru, L. E., Ayodeji, S., ... & Ige, O. O. (2024). Microstructural characterization and corrosion behaviour of heat treated standard stainless steels in Tar Sand. Hybrid Advances, 100195.
De George, E. T. (2015). The importance of accounting policy choice in the measurement of earnings: An examination of discontinued operations reporting. Accounting Horizons Journal, 29(2), 247-264.
Dima, S. I. & Dima, B. (2017). The impact of IFRS adoption on financial ratios: Evidence from listed Romanian companies. Economic Computation and Economic Cybernetics Studies and Research, 51(1), 5-21.
Ebirim, G. U., Ndubuisi, N. L., Unigwe, I. F., Asuzu, O. F., Adelekan, O. A., & Awonuga, K. F. (2024). Financial literacy and community empowerment: A review of volunteer accounting initiatives in low-income areas. International Journal of Science and Research Archive, 11(1), 975-985.
Eneh, N. E., Adeniyi, A. O., Akpuokwe, C. U., Bakare, S. S., & Titor-Addingi, M. C. (2024). Evaluating environmental legislation on disaster resilience: Data insights from Nigeria and the USA. World Journal of Advanced Research and Reviews, 21(2), 1900-1908.
Eshonqulov, A. Q. (2024). Assessing the impact of international cash accounting standards on financial statements of enterprises. European Journal of Contemporary Business Law & Technology, 1(2), 54-62.
Familoni, B. T., Abaku, E. A., & Odimarha, A. C. (2024). Blockchain for enhancing small business security: A theoretical and practical exploration. Open Access Research Journal of Multidisciplinary Studies, 7(1), 149-162.
https://doi.org/10.53022/oarjms.2024.7.1.0020.
Gaber, M. M. (2020). The impact of accounting policy on the quality of financial reporting in the UAE. Journal of Financial Reporting and Accounting, 18(1), 62-80.
Hong, H., Kim, J. B., & Lee, Y. W. (2018). The effect of mandatory IFRS adoption on accounting conservatism. Journal of Business Finance & Accounting, 45(5-6), 619-651.
Igbinenikaro, E., & Adewusi, O. A. (2024). Policy recommendations for integrating artificial intelligence into global trade agreements. International Journal of Engineering Research Updates, 06(01), 001-010.
https://doi.org/10.53430/ijeru.2024.6.1.0022.
Kimmel, P. D., Weygandt, J. J., & Kieso, D. E. (2021). Financial accounting: Tools for business decision making. Wiley, New Jersey.
Nguyen, I. U. (2019). The (un)suitability of fair-value accounting in emerging economies: the case of vietnam. Journal of Accounting & Organizational Change, 15(2), 170-197. https://doi.org/10.1108/JAoc-03-2018-0032.
Qudratovich, E. A. (2022). Basis of efficient cash flow management of the enterprise. International Journal on Economics, Finance and Sustainable Development, 4(12), 5-11.
Qudratovich, E. A. (2023). Cash Flow Statement is one of the Important Sources of Information on the Cash Flows of an Enterprise. Journal of Ethics and Diversity in International Communication, 3(2), 40-47.
Sangchan, P., Habib, A., Jiang, H., & Bhuiyan, M. B. U. (2020). Fair value exposure, changes in fair value and audit fees: evidence from the Australian real estate industry. Australian Accounting Review, 30(2), 123-143. https://doi. org/10.1111/auar.12299.
Tișcenco, V., & Bădicu. G. (2024). The utility of accounting policies for financial reporting. European Journal of Accounting, Finance & Business, 12(1), 48-54.
Trivellas, P., & Trivellas, A. (2018). The importance of accounting policies for a fair and transparent reporting of entities’ performance. The Journal of Accounting and Management, 8(1), 19-38.
Uzougbo, N. S., Akagha, O. V., Coker, J. O., Bakare, S. S., & Ijiga, A. C. (2023). Effective strategies for resolving labour disputes in the corporate sector: Lessons from Nigeria and the United States.
Volodymyr, C., & Чизикoв, B. B. (2024). Prospects for regulation of accounting and taxation of virtual assets in Ukraine. Український економічний часопис, 5(1), 141-145.
Zhang, Y., Chong, G., & Jia, R. (2019). Fair value, corporate governance, social responsibility disclosure and banks’ performance. Review of Accounting and Finance, 19(1), 30-47. https://doi.org/10.1108/rAF-01-2018-0016.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 Global Journal of Economic and Finance Research
This work is licensed under a Creative Commons Attribution 4.0 International License.
