Fair value measurement and profitability of listed manufacturing firms in Nigeria

This study examined the connection between fair value measurement and profitability of listed manufacturing companies in Nigeria. The cross-sectional research design was used and data was obtained using annual reports of the companies to be used. It was analyzed with the help of the Maximum Likelihood Estimation (MLE) technique, and the pooled probit regression was used to estimate the parameters of the model. This study involved a study over a period of seven years between the year 2013 and 2019 and the manufacturing firms on the Nigerian Exchange Group. The results indicated that there is a high influence of the fair value measurement on both the profitability of firms, inventory valuation and the financial reporting practices. It is on these results that the study suggests that manufacturing companies should use fair value measurement in the preparation of financial reports since it gives a more conservative and realistic view of the financial performance in line with the principle of prudence in accounting. Moreover, the professional accounting institutions in Nigeria ought to run special workshops among the financial managers and accountants to create awareness and knowledge of the International Financial Reporting Standards (IFRS) with special emphasis on the fair value practices. Lastly, the national standard-setting body should also make sure that there is a rigid implementation of IFRS compliance by imposing sanctions on companies which do not comply with the set guidelines.