Is other comprehensive income items value relevant in Nigeria?

Authors

  • Aliyu Usman Baba Department of Accounting, Ibrahim Badamasi Babangida University Lapai, Niger State, Nigeria

Keywords:

other comprehensive income, value relevance, financial assets

Abstract

The switch over of Nigerian publicly listed interest entities to the International Financial Reporting Standard (IFRS) represents some new requirement to reporting firms. Beginning 2012, Nigerian reporting entities are marking-to-market certain financial assets and liabilities and recognizes holding gains and losses arising from such accounting flows as Other Comprehensive Income (OCI). The objective of this study is twofold. The first objective is to investigate the value relevance of OCI items (fair value gains and losses on revaluation of non-current assets, available for-sale financial assets and actuarial gains and losses on defined benefit plans). The second objective is structured to examine whether OCI items provides incremental information beyond
net income. A sample of 117 firms listed on the Nigerian Stock Exchange comprising of 37 and 80 financial and non-financial firms respectively were used. Based on the price and return regressions, the result suggests that only re-measuring of available-for-sale financial asset is value relevant. No evidence found to establish dominance of any OCI item over the traditional net income. This attempt is the initial evidence that demonstrates the benefits arising from fair value gains and losses by Nigerian firms.

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Published

2020-06-30

How to Cite

Baba, A. . U. (2020). Is other comprehensive income items value relevant in Nigeria? . International Journal of Intellectual Discourse, 3(1). Retrieved from https://ijidjournal.org/index.php/ijid/article/view/758

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Articles