IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF ECONOMICS AND BUSINESS MANAGEMENT (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 11 NO. 5 2025
DOI: 10.56201/ijebm.vol.11.no5.2025.pg72.83

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Fair Value Accounting and Investment in Securities by Financial Service Sector in Nigeria

TONYE, Ogiriki, ATINAKPA, Tonbra Veracious

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Abstract

This study examined the impact of fair value accounting on investment in securities among financial service companies listed on the Nigerian Exchange Group (NGX) from 2020 to 2023. Using panel data from 18 financial service firms, the study investigated the relationship between fair value accounting and investment in securities, while considering firm size as a mediating variable. The regression results revealed that fair value accounting had a significant negative effect on investment in securities, with a coefficient of -0.4686 and a p-value of 0.0014, indicating that an increase in the fair value of assets tended to reduce investment in securities. Furthermore, firm size significantly mediated this relationship, with the interaction term (FV*INSEC) showing a coefficient of 9.16E-07 and a p-value of 0.0020, suggesting that larger firms were better able to absorb the effects of fair value fluctuations. In conclusion, the study highlighted that fair value accounting significantly influenced investment in securities, with larger firms being better positioned to manage the risks associated with fair value fluctuations. Based on these findings, it was recommended that regulatory bodies consider revising fair value accounting guidelines to reduce volatility in asset valuations and provide clearer frameworks for financial reporting. Additionally, financial service firms, particularly smaller ones, were advised to enhance their capacity to manage fair value fluctuations by leveraging firm size or adopting risk management strategies. These recommendations aimed to improve investment decision-making within the Nigerian financial service sector and help firms navigate the challenges posed by fluctuating asset values.

keywords:

Fair Value Accounting, Firm Size, Financial Reporting.

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