IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 10 NO. 8 2024
DOI: 10.56201/ijbfr.v10.no8.2024.pg151.164

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Fair Value Accounting on Earnings Quality of Deposit Money Banks in Nigeria

Abasiama Akpaka, Dr. Eno Ukpong and Dr. Uwem E. Uwah

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Abstract

The adoption of fair value accounting raises concerns about the transparency and comparability of financial statements, especially in an environment where regulatory oversight may be inconsistent, and market conditions are highly volatile. The major objective of this study was to examine the effects of fair value accounting on earnings quality of deposit money banks in Nigeria. The independent variable of the study being fair value accounting was proxied by the fair value gains/losses through profit or loss and fair value gains/losses through other comprehensive income while earnings quality was measured using total accruals. The research design employed in this study was ex post facto. Secondary data were used and the data employed was analyzed using robust regression technique while the statistical software used was STATA version 16. The findings of the study revealed that fair value gains or losses through profit or has significant positive effect on earnings quality; fair value gains or losses through other comprehensive income has significant positive effect on earnings quality. Based on the findings of the study, it was concluded that fair value accounting has significant effect on earnings quality of listed deposit money banks. It was therefore recommended that deposit money banks should enhance their risk management strategies to mitigate the volatility introduced by fair value changes in assets and liabilities.

keywords:

Fair value accounting, earnings quality, profit or loss, other comprehensive income, to

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