Does Audit Committee Moderate The Value Relevance Of Fair Value Accounting Information? Evidence From Listed Consumer Goods Firms In Nigeria
DOI:
https://doi.org/10.37075/FABA.2025.2.09Keywords:
Earnings, Agency theory, Ohlson Model, Mark-to-marketAbstract
Purpose: This study examines the value relevance of fair value accounting (FVA) in Nigerian consumer goods firms and explores the moderating effect of audit committee attributes on the Value relevance. The motivation is to determine whether fair value measurements under IFRS provide useful information to investors in an emerging market setting.
Design/Methodology/Approach: Panel data for a period (2012-2022) were obtained from listed consumer goods firms in Nigeria, and the Ohlson (1995) valuation model was applied within both unmoderated and moderated regression (Structural Equation Modeling) frameworks. Audit committee attributes were measured through an index.
Findings: The results show that traditional accounting measures, book value per share (BVS) and earnings per share (EPS), remain highly value relevant, while most fair value measures are not significantly associated with market price per share (MPS). Only Level 2 Fair Value liabilities were significantly priced by investors, suggesting partial relevance of FVA. Furthermore, audit committee attributes did not significantly moderate the relationship between FVA and Market Prices, indicating weak governance influence.
Practical implications- The findings highlight the need for regulators to strengthen disclosure requirements for fair value estimates, for firms to improve governance and audit committee effectiveness, and for investors to balance reliance on traditional measures with cautious interpretation of FVA disclosures.
Originality/value- This study provides new evidence on the value relevance of FVA in Nigeria’s non-financial sector, an area that has received little attention compared to banks and insurance firms. It also contributes to the governance literature by assessing the moderating role of audit committees in an emerging economy.
Paper Type: Research Paper
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References
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