Financial Information Disclosure and the Reliability of Fair Value Estimations in Published Financial Statements: Evidence from Real Estate Sector in Nigeria

Egbunike, A.P., Abiahu, M.F.C (2017). Financial Information Disclosure and the Reliability of Fair Value Estimations in Published Financial Statements: Evidence from Real Estate Sector in Nigeria. Asian Journal of Economics, Business and Accounting, 5(1): 1-7

7 Pages Posted: 6 Nov 2017

See all articles by Amaechi Egbunike

Amaechi Egbunike

Nnamdi Azikiwe University - Department of Accountancy

Mary-Fidelis Chidoziem Abiahu

Nnamdi Azikiwe University - Department of Accountancy

Sandra Okwuada

Nnamdi Azikiwe University - Department of Accountancy

Date Written: November 1, 2017

Abstract

The inadequacy of historical cost measurement has been unto capture current market information and conditions have given rise to the increased use of fair value measurement. However, there has been a controversy as to whether Fair Value Accounting actually satisfies this need it purports to in respect of necessary conditions and benefits for its usage. The study specifically analyzed the reliability of fair value estimations in financial statement disclosures and the availability of active markets for fair value allocation. The respondents consisted of professional accountants in business and public practice and academics in Anambra State. The study was anchored upon the efficient market hypothesis and the agency theory. Disproportionate stratified random sampling technique was used to select the sample from each stratum; the study used simple random sampling giving the study a sample population of 67 respondents from the target population which was believed to be a good representation of real estate market. Primary data were gathered using unstructured questionnaires while the ANOVA test was employed to analyze the information gathered. The result showed that fair value estimates are not reliable to users of financial information. It was also found that there is low availability of active markets for fair value estimation. The paper concludes that companies should adopt a hybrid form of measurement (measurement should entail both fair and historical values) and provide all necessary information needed to understand the allocation of fair value in the notes to the accounts to improve the reliability of financial information disclosed in published financial statements.

Keywords: Accounting information; fair value; information disclosure

JEL Classification: M40, M48,

Suggested Citation

Egbunike, Amaechi and Abiahu, Mary-Fidelis Chidoziem and Okwuada, Sandra, Financial Information Disclosure and the Reliability of Fair Value Estimations in Published Financial Statements: Evidence from Real Estate Sector in Nigeria (November 1, 2017). Egbunike, A.P., Abiahu, M.F.C (2017). Financial Information Disclosure and the Reliability of Fair Value Estimations in Published Financial Statements: Evidence from Real Estate Sector in Nigeria. Asian Journal of Economics, Business and Accounting, 5(1): 1-7, Available at SSRN: https://ssrn.com/abstract=3065125

Amaechi Egbunike

Nnamdi Azikiwe University - Department of Accountancy ( email )

Awka, Anambra 23400
Nigeria

Mary-Fidelis Chidoziem Abiahu (Contact Author)

Nnamdi Azikiwe University - Department of Accountancy ( email )

Awka, Anambra 23400
Nigeria

Sandra Okwuada

Nnamdi Azikiwe University - Department of Accountancy

Awka, Anambra 23400
Nigeria

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