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Finance, Accounting and Business Analysis 
Volume 7 Issue 2, 2025 

http://faba.bg/       
ISSN  2603-5324 

DOI: https://doi.org/10.37075/FABA.2025.2.09 

 

Does Audit Committee Moderate The Value Relevance Of Fair Value 

Accounting Information? Evidence From Listed Consumer Goods Firms In 

Nigeria 

 

Kabiru Isa Dandago 1 , Modibbo Abubakar 2*  

 

Department of Accounting, Bayero University Kano, Nigeria1 

Department of Accounting, Bayero University Kano, Nigeria2 

* Corresponding author 

 

Info Articles   Abstract 
 

History Article: 

Submitted  10 June 2025 

Revised 16 November 2025 

Accepted 20 November 2025 

 Purpose: This study examines the value relevance of fair value accounting 

(FVA) in Nigerian consumer goods firms and explores the moderating effect 

of audit committee attributes on the Value relevance. The motivation is to 

determine whether fair value measurements under IFRS provide useful 

information to investors in an emerging market setting. 

Design/Methodology/Approach: Panel data for a period (2012-2022) 

were obtained from listed consumer goods firms in Nigeria, and the Ohlson 

(1995) valuation model was applied within both unmoderated and 

moderated regression (Structural Equation Modeling) frameworks. Audit 

committee attributes were measured through an index. 

Findings: The results show that traditional accounting measures, book 

value per share (BVS) and earnings per share (EPS), remain highly value 

relevant, while most fair value measures are not significantly associated with 

market price per share (MPS). Only Level 2 Fair Value liabilities were 

significantly priced by investors, suggesting partial relevance of FVA. 

Furthermore, audit committee attributes did not significantly moderate the 

relationship between FVA and Market Prices, indicating weak governance 

influence. 

Practical implications- The findings highlight the need for regulators to 

strengthen disclosure requirements for fair value estimates, for firms to 

improve governance and audit committee effectiveness, and for investors to 

balance reliance on traditional measures with cautious interpretation of 

FVA disclosures. 

Originality/value- This study provides new evidence on the value relevance 

of FVA in Nigeria’s non-financial sector, an area that has received little 

attention compared to banks and insurance firms. It also contributes to the 

governance literature by assessing the moderating role of audit committees 

in an emerging economy. 

Paper Type:  Research Paper 

 

Keywords:  

Earnings, Mark-to-Market, 

Ohlson Model, Investors  
 

 

JEL: M41, M48, G34  

* Address Correspondence:   

E-mail: kidandago@gmail.com1   

  amodibbo8@gmail.com2 

 

 

 

http://faba.bg/
https://doi.org/10.37075/FABA.2025.2.09
mailto:Fabian.moodley@nwu.ac.za1
https://orcid.org/0000-0002-3655-0421
https://orcid.org/0000-0003-3143-5720


Kabiru Isa Dandago, Modibbo Abubakar / Finance, Accounting and Business Analysis, Volume 7, Issue 2, 2025 

236 
 

INTRODUCTION 
 

Fair Value Accounting (FVA) has become one of the most transformative developments in contemporary 

financial reporting. Rooted in the International Financial Reporting Standards (IFRS) project, it shifted 

emphasis from historical cost accounting toward market-based measurement. IFRS 13 defines fair value as the 

price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market 

participants at the measurement date. The intent is to provide timely, relevant, and decision-useful information. 

Today, over 160 countries—including Nigeria—have adopted IFRS, making FVA a central pillar of global 

accounting practice. 

Nigeria’s adoption of IFRS in 2012 marked a turning point in its reporting environment. The Financial 

Reporting Council of Nigeria (FRCN) expected IFRS to enhance comparability, transparency, and investor 

confidence, thereby attracting foreign capital. Within this framework, the consumer goods sector is highly 

relevant. Firms such as Nestlé Nigeria Plc, Dangote Sugar Refinery Plc, Flour Mills of Nigeria Plc, and Unilever 

Nigeria Plc are among the largest non-oil contributors to GDP and some of the most widely traded equities on 

the Nigerian Exchange Group (NGX). These companies, therefore, provide a useful context for assessing 

whether FVA enhances the value relevance of financial reports in Nigeria. 

Despite global enthusiasm, FVA has faced criticism, particularly regarding Levels 2 and 3 of the fair value 

hierarchy. While Level 1 relies on quoted prices in active markets, Levels 2 and 3 involve indirect or 

unobservable inputs, often requiring judgment and assumptions. In Nigeria, where markets are shallow and 

illiquid, these inputs expose valuations to subjectivity and possible manipulation. The 2008 global financial crisis 

reinforced concerns that reliance on unobservable inputs undermines reliability. In response, the IASB and 

FASB issued stricter disclosure rules and required firms to explain valuation techniques and assumptions. 

Nevertheless, evidence on the usefulness of FV disclosures remains inconclusive, especially in emerging markets 

(Mechelli and Cimini 2020; Nicholls 2020; Eshiett et al. 2023). 

Nigerian investors, in particular, remain skeptical of FV disclosures due to weak governance and 

enforcement. Persistent issues such as insider trading, poor monitoring, and managerial opportunism have 

reduced confidence in reported figures. Unlike developed markets with deep liquidity and robust enforcement, 

Nigeria’s institutional environment limits the role of FVA in share pricing. Investors continue to rely more on 

book value and earnings per share, while the incremental contribution of FVA is uncertain (Abubakar 2018; 

Eshiett et al. 2023). 

Theoretically, strong corporate governance should mitigate these weaknesses. Agency theory suggests 

that managers may use discretion in accounting to pursue personal interests, but effective monitoring—

particularly by audit committees—aligns managerial reporting with shareholder needs. Audit committees 

oversee financial reporting, liaise with external auditors, and enforce compliance with standards. Attributes such 

as independence, expertise, gender diversity, and diligence enhance their effectiveness (Velte 2017; Siekkinen 

2016). Where audit committees are robust, FVA disclosures should carry more credibility and be more strongly 

priced by investors. 

Yet, the role of audit committee attributes in shaping the value relevance of FVA remains underexplored 

in Nigeria, especially in non-financial firms. Previous local research has focused largely on banks and insurance 

firms (Usman et al. 2017; Abubakar 2018). Consumer goods companies, however, are highly visible, widely 

held, and economically significant. Whether their audit committees strengthen or fail to strengthen investor 

confidence in FVA represents an important empirical question. 

Globally, findings are mixed. Song et al. (2010) showed that in U.S. banks, strong governance increased 

the credibility of Level 3 valuations. Nicholls (2020) reported similar results in European and Canadian firms, 

confirming that audit committees and board structures influence whether investors trust FV disclosures. In 

contrast, Mechelli and Cimini (2020) observed that the incremental value relevance of IFRS 9 compared to IAS 

39 was conditional on governance quality, implying that in weak institutions, investors may discount FV 

estimates. Evidence from emerging economies is equally diverse: Ahmad and Aladwan (2015) found that FV 

improved financial performance in Jordanian real estate firms, while Mohammed (2020) reported that Level 2 

assets had a negative association with stock prices in Jordan, highlighting distrust of less observable inputs. 

The Nigerian experience reflects this complexity. Abubakar (2018) showed that while FVA increased the 

relevance of accounting information relative to historical cost, it also created earnings volatility in banks and 

insurers. Eshiett et al. (2023) found that FVA positively affected earnings per share but had mixed effects on 

market capitalization, again suggesting ambivalence among investors. Whether such patterns extend to 

consumer goods firms, with different asset and liability structures, is uncertain and under-researched. 

Global economic disruptions have further sharpened this debate. The COVID-19 pandemic and 



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subsequent inflationary pressures have stressed valuation models worldwide. Asset impairments, foreign 

exchange instability, and supply chain disruptions make FV estimation more complex and less reliable. Recent 

studies (Zhang and Qu 2022) indicate that during volatile periods, investors increasingly discount Level 2 and 

Level 3 inputs, questioning whether FVA continues to deliver relevance in crisis conditions. In Nigeria, 

consumer goods companies faced currency shortages, cost inflation, and disrupted logistics during the pandemic, 

raising concerns about the credibility of FV disclosures in such environments. 

Recent governance reforms in Nigeria add another dimension. The Companies and Allied Matters Act 

(CAMA 2020) and the Nigerian Code of Corporate Governance (NCGC 2018) mandate minimum standards 

for audit committees, including independence and size. These provisions align with international practice, but 

their effectiveness in enhancing reporting quality remains contested. It is unclear whether institutional 

weaknesses will undermine their intended role, or whether stronger committees can, in fact, improve investor 

trust in FVA. 

This uncertainty motivates the current study. It investigates whether audit committee attributes moderate 

the relationship between FVA and value relevance in Nigerian consumer goods firms. Using the Ohlson (1995) 

valuation model and Structural Equation Modeling (SEM), the study evaluates interactions among FVA, audit 

committees, and market value. The contribution is twofold: it extends the literature by examining non-financial 

firms in an emerging economy, and it provides practical insights on the capacity of governance mechanisms to 

enhance the credibility of complex accounting disclosures. 

In summary, while FVA aims to provide timely, market-based information, its relevance in emerging 

markets is compromised by measurement subjectivity and institutional weaknesses. Audit committees are 

theoretically positioned to mitigate these problems, but evidence from Nigeria is limited and inconclusive. By 

focusing on consumer goods firms, this study adds to global debates on whether FVA enhances or undermines 

financial reporting quality and whether audit committee attributes can strengthen investor confidence in fragile 

governance environments. 

 

Objectives of the Study 
The main objective of the study is to examine the effects of audit committee attributes on the value 

relevance of fair value assets and liabilities of listed consumer goods firms in Nigeria. The specific objectives of 

the study are: 

i. To examine the value relevance of the level 1 fair value assets and liabilities of listed consumer goods 

firms in Nigeria. 

ii. To assess the value relevance of the level 2 fair value assets and liabilities of listed consumer goods firms 

in Nigeria. 

iii. To evaluate the value relevance of the level 3 fair value assets and liabilities of listed consumer goods 

firms in Nigeria. 

iv. To compare the value relevance of level 1 and level 2 and 3 fair value assets and liabilities of listed 

consumer goods firms in Nigeria. 

v. To examine the moderating effect of audit committee attributes on the value relevance of the hierarchies 

of fair value assets and liabilities of listed consumer goods firms in Nigeria. 

Hypotheses of the Study 
The following hypotheses are formulated in null form for the study; 

 H01: Level 1 fair value assets and liabilities are not value-relevant in the listed consumer goods firms in Nigeria. 

 H02: Level 2 fair value assets and liabilities are not value-relevant in the listed consumer goods firms in Nigeria. 

 H03: Level 3 fair value assets and liabilities are not value-relevant in the listed consumer goods firms in Nigeria. 

 H04: Level 1 fair value assets and liabilities are not more value-relevant than level 2 and 3 fair value assets and 

liabilities in the listed consumer goods firms in Nigeria. 

 H05: Audit committee attributes have no significant moderating effect on the value relevance of the hierarchy 

of fair value assets and liabilities of listed consumer goods firms in Nigeria. 

The research provides timely insights amid ongoing concerns about the quality of financial reporting in 

Nigeria and other developing economies. It offers empirical evidence from a non-Western context (Nigeria), 

analyzing the post-IFRS 13 adoption effects on fair value measurements (FVM). The study is valuable to 

regulators like the FRCN and IASB, aiding them in standard-setting and oversight. The study contributes to the 

global FVA debate, providing a basis for reforms in IFRS and related disclosure standards. It is foundational for 
future academic research, particularly in the underexplored application of FVA in developing countries.  



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LITERATURE REVIEW 

 

Fair Value Accounting has a long intellectual history that reflects the evolution of financial reporting 

thought. Early debates in the 1930s by Paton and Littleton highlighted opposing perspectives on how best to 

measure income. Paton emphasized a value-based, economic perspective, while Littleton advocated historical 

cost, stressing objectivity and reliability. Chambers, in the 1950s, advanced the exit price concept, emphasizing 

the use of current market prices as the most relevant measure of value. MacNeal (1939) also underscored the 

importance of exchange values, viewing fair value as “power in exchange.” 

Over time, standard-setting bodies institutionalized FVA. The U.S. Financial Accounting Standards 

Board (FASB) introduced Statement of Financial Accounting Standards (SFAS) 107 and 157, while the 

International Accounting Standards Board (IASB) embedded FVA in multiple standards, including IAS 2 

(Inventories), IAS 16 (Property, Plant, and Equipment), IAS 32 (Financial Instruments), IAS 39 (Recognition 

and Measurement), IAS 40 (Investment Property), IAS 41 (Biological Assets), and IFRS 3 (Business 
Combinations). IFRS 13 later provided a comprehensive definition of fair value as the exit price in an orderly 

transaction between market participants at the measurement date. 

FVA is applied using three principal bases: exit price (dominant in IFRS 13), entry price, and value in 

use. The exit price perspective prevails because it aligns with market-based valuation. However, its application 

is not without challenges. In liquid markets, Level 1 inputs provide observable, objective values. In illiquid or 

inactive markets, entities must rely on Level 2 (indirectly observable) or Level 3 (model-based unobservable) 

inputs, which increases estimation risk. 

The three-level hierarchy introduced in IFRS 13 addresses these varying degrees of measurement 

reliability: 

Level 1: Quoted prices in active markets for identical assets and liabilities. 

Level 2: Inputs observable either directly or indirectly, such as prices of similar assets or interest rates. 

Level 3: Unobservable inputs requiring valuation models, assumptions, and managerial discretion. 

While Level 1 is considered most reliable, Levels 2 and 3 introduce subjectivity and raise concerns about 

earnings management, reliability, and investor trust. Following the 2008 global financial crisis, both the IASB 

and FASB enhanced disclosure requirements for Levels 2 and 3, underscoring transparency and consistency in 

valuation. 

Value relevance research provides a framework for evaluating financial reporting quality. It assesses 

whether accounting information is statistically associated with capital market values. Miller and Modigliani 

(1966) first demonstrated a link between book value and market value, while Barth et al. (2001, 2008) and Beaver 

(2002) confirmed that equity markets price earnings and book value. The Financial Accounting Standards Board 

(1980) defines relevance as the ability of information to influence decision-making. 

The Ohlson model (1995, 1999), grounded in the Residual Income Valuation (RIV) model of Edwards 

and Bell (1961), provides the theoretical foundation for much of value relevance research. It expresses firm value 

as a function of book value of equity, abnormal earnings, and dividends. Its strength lies in connecting 

accounting information with market-based valuation, though it assumes market efficiency—a condition not 

always met in emerging economies such as Nigeria. 

Conceptually, FVA should enhance value relevance by providing timely, market-reflective data, unlike 

historical cost, which lags behind economic conditions. Scholars such as Penman (2007), Laux and Leuz (2009), 

and Emerson et al. (2010) argue that FVA is superior in informativeness, even in illiquid markets. However, its 

reliance on managerial discretion, particularly at Level 3, can erode reliability and undermine investor trust. 

 

Empirical Review 
Song et al. (2010) assessed the value relevance of different levels of fair value (FV) measurements in U.S. 

banks, showing that Level 1 and Level 2 FVs were more relevant than Level 3. They also found that strong 

corporate governance improved the relevance of Level 3 estimates. Similarly, Meyers (2014) discovered that 

market prices were positively related to FVA, particularly Level 3 assets, despite criticisms of their subjectivity. 

Song (2015) further demonstrated that market volatility discounts FV values, while Du et al. (2014) revealed 

that transferring assets from Level 3 to Level 2 increased value relevance, underscoring the importance of 

observability. 

Zhang and Tama-Sweet (2015) examined FV relevance during the 2008–2009 financial crisis compared 

to 2012–2013, finding FV assets generally more relevant than non-FV assets, especially in recessionary periods, 

with governance playing a strengthening role. Ahmad and Aladwan (2015) reported that FV measurements for 



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investment properties improved performance and market value for Jordanian real estate firms. In Singapore, 

Tan (2015) found that Level 1 and 2 measures were significantly related to market values, but Level 3 measures 

were less so. Lawrence et al. (2016) studied U.S. mutual funds and observed minimal differences across FV 

levels. Goh et al. (2015) noted that Level 3 assets in U.S. banks had lower relevance compared to Level 1 and 2, 

though the gap narrowed post-crisis. Kisseleva and Lorenz (2016) also found that Level 3 FVs were less relied 

upon in European banks, except for held-for-trading securities, which retained relevance. 

Adwan (2016) concluded that Level 1 and 2 FVs were more relevant than Level 3 in European financial 

firms, especially in weaker institutional environments. Siekkinen (2015) emphasized that stronger investor 

protection increased relevance, with Level 1 assets being most valued. Li (2016), in China, found Level 1 and 2 

assets value relevant, while Level 3 varied across firms. Tetteroo (2016), studying U.S. non-financial firms, 

confirmed all FV levels were relevant except for Level 3 liabilities, with crisis effects being temporary. Chung et 

al. (2016) highlighted that enhanced FV disclosures improved investor confidence, particularly in Level 3 

estimates. 

Velte (2017) revealed that gender diversity enhanced the value relevance of Level 1 and 2 measures in 

German firms, though not Level 3. Siekkinen (2016) also found that board independence and gender diversity 

increased the relevance of Level 3 FVs in European firms. Fiechter and Novotny-Farkas (2017) stressed 

institutional quality, observing reduced relevance in weaker information environments. Wang et al. (2017) 

identified that Level 1 and 2 FVs were relevant in China, while Level 3 varied with institutional contexts. 

Freeman et al. (2017) documented that Level 1 assets in U.S. banks were more relevant than Levels 2 and 3, 

which lost importance after the crisis. 

Bandyopadhyay et al. (2017) studied Canadian REITs and found that conservative firms’ FV adjustments 

better predicted future cash flows, with IFRS adoption improving predictive ability. In Nigeria, Usman et al. 

(2017) showed that corporate governance improved the valuation of other comprehensive income. Abubakar 

(2018) found that FV was more relevant than historical cost in Nigerian banks and insurers, though it increased 

volatility. 

Daas and Jamal (2018) concluded that FV hierarchy levels affect relevance in Palestine, with Level 3 

assets not necessarily reducing investor pricing when audited. Zamora-Ramírez and Morales-Díaz (2018) 

reviewed the literature and emphasized that FV reflects risk management more effectively than HCA. Fortin et 

al. (2020) demonstrated that FV relevance varies by investment type in U.S. closed-end funds, influenced by 

audit practices. 

Adwan et al. (2020) observed that FVA mitigated the crisis impact on equity book value in European 

firms but not on net income. Mohammed (2020) in Jordan found that Level 1 assets were positively linked to 

stock prices, while Level 2 assets had negative effects. Mechelli and Cimini (2020) argued that IFRS 9 provides 

more relevant information than IAS 39, particularly where governance is strong. Nicholls (2020) showed that 

strong governance improved the reliability of Level 3 estimates in EU and Canadian banks. Tsadira (2020) 

reported mixed outcomes for European and Norwegian banks, with FV levels showing improvements in some 

contexts but deterioration in others. 

Zhang and Qu (2022) established that FV adjustments increased the relevance of book value and earnings, 

but without incremental explanatory power. Eshiett et al. (2023) found that FVA improved earnings per share 

in Nigerian banks but had mixed effects on market capitalization. Recent Nigerian studies have broadened the 

evidence base. Abubakar and Abubakar (2015) showed that recognizing intangible assets, particularly brand 

value, enhanced accounting information quality in listed high-technology firms. Abubakar, Abubakar, and 

Iliyasu (2015) reported that FVA significantly improved earnings quality in deposit money banks. Abubakar, et 

al. (2024) confirmed that IFRS adoption significantly enhanced the decision usefulness of accounting 

information in Nigerian banks, aligning with global standards. Dandago and Abubakar (2025) found that Level 

2 fair value assets and Level 1 fair value liabilities have an insignificant positive impact on financial reporting 

quality. The findings also revealed that Level 3 fair value assets and Level 2 fair value liabilities have a significant 

positive impact on financial reporting quality. However, the findings indicated that the audit committee 

attributes index has a significant moderating effect on the relationship between fair value accounting and the 

financial reporting quality of listed consumer goods firms in Nigeria. 

However, several gaps remain. First, most Nigerian studies focus on financial institutions, leaving non-

financial sectors, such as consumer goods firms underexplored despite their significant role in the NGX. Second, 

limited research has addressed the moderating role of audit committees in linking FVA and value relevance, 

especially in emerging markets. Third, methodological diversity is weak, as most studies rely solely on regression 

models without addressing measurement error. This study addresses these gaps by employing Structural 

Equation Modeling (SEM) to evaluate how audit committee attributes influence the value relevance of FVA in 



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Nigerian consumer goods firms. 

 

 

METHODOLOGY 

 
This study adopts a correlational ex-post facto research design. The choice of design is guided by the 

study’s objective: to examine whether audit committee attributes moderate the relationship between FVA and 

value relevance among listed consumer goods firms in Nigeria. A correlational approach is appropriate because 

it allows for the investigation of relationships among variables, while the ex-post facto orientation reflects 

reliance on secondary data from historical financial statements and stock prices. This design is consistent with 

prior value relevance studies (Barth et al. 2001; Song et al. 2010; Abubakar 2018), which typically examine 

associations between accounting data and market-based measures. 

The population of the study comprises all 25 consumer goods firms listed on the NGX as of December 

2022. These firms play a pivotal role in Nigeria’s economy by producing essential goods, contributing 

significantly to GDP, and attracting substantial investment. A purposive sampling technique was employed to 

ensure data availability and continuity across the study period (2012–2022). Firms with incomplete financial 

data, inconsistent listings, or delistings were excluded. Specifically, Premier Breweries Plc, Guinness Breweries 

Plc, Multi-Trex Food Plc, Jos Breweries Plc, and Dangote Flour Mills Plc were removed due to listing 

irregularities. DN Tyre & Rubber Plc and P.S. Mandrid Plc were excluded due to delisting, while BUA Foods 

Plc was only recently listed in 2022. After applying these criteria, 17 firms were retained as the final sample. 

This sample size is consistent with studies of similar scope in Nigeria and is deemed adequate for SEM, which 

requires a relatively large sample-to-variable ratio for robust estimation (Hair et al. 2010). 

The study relied exclusively on secondary data. Annual reports and accounts of the sampled firms 

provided information on book value, earnings, fair value disclosures, and audit committee characteristics. Stock 

price data were sourced from NGX daily price listings. To ensure consistency, stock prices were measured 90 

days after each firm’s year-end to allow for market assimilation of published financial information, in line with 

Barth et al. (2001). 

Traditional regression models such as OLS and panel regression are widely used in value relevance 

studies. However, they assume perfect measurement and often fail to account for latent constructs and error 

correlations. This study employs SEM using IBM AMOS because the Audit Committee Index is a composite 

latent variable that SEM models more accurately than OLS; SEM explicitly accounts for measurement error in 

observed variables, and SEM provides goodness-of-fit statistics (RMSEA, CFI, TLI, SRMR) that evaluate the 

adequacy of the model. This methodological advancement addresses the limitations of prior Nigerian studies 

that relied solely on regression analysis. 

One of the market measures of FRQ is the association of accounting information with firm market values. 

To test the value relevance of FVA, the study estimates the association between share prices and fair values of 

assets and liabilities using the Modified Ohlson (1995) Model, which has been extensively employed in the 

literature. The model is as follows: 

 

MPSit = β0 + β1BPSit + β2EPSit + β3FVA1it + β4FVA2it + β5FVA3it + β6FVL1it + β7FVL2it + 

β8FVL3it + β9ACIit + β10FSZit + β11FGEit + εit 
(1) 

 

Where;  

MPSit - Market Price Per Share of firm I in year t  

BPSit - Book Value Per Share of firm I in year t 

EPSit - Earnings Per Share of firm I in year t 

β0 is the regression intercept, β1- β11 are estimators, while εit is the residuals 

 

To examine the moderating effect of the audit committee (using an index score) on the value relevance 

of fair value assets and liabilities of listed consumer goods firms in Nigeria, the following Model will be used: 

 



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MPSit = β0 + β1BPSit + β2EPSit + β3FVA1it + β4FVA2it + β5FVA3it + β6FVL1it + β7FVL2it + 

β8FVL3it + β9ACIit + β10FVA1it*ACIit + β11FVA2it*ACIit + β12FVA3it*ACIit + β13FVL1it*ACIit 

+ β14FVL2it*ACIit + β15FVL3it*ACIit + β16FSZit + β17FGEit + εit 

(2) 

 

As a moderating variable and for the study to capture the multiple dimensions of the firms’ AC structure 

and attributes, an Audit Committee Attributes Index (ACI) was developed based on the attributes: audit 

committee size, appointment of Independent Directors, Independent Chair, Financial Expertise, Women, 

Foreign Membership, audit committee Meetings Frequency, and meetings Attendance. 

 

RESULTS AND DISCUSSIONS 
 

Descriptive Statistics 
The descriptive statistics of the variables are presented in Table 1. 

 

Table 1. Descriptive Statistics of Variables of the Study 

Variables Mean Std. Dev. Minimum Maximum Skewness Kurtosis N 

MPS 88.086 267.155 1.000 1557 4.086 19.162 187 

FVA1 1.609 7.587 0.000 62.300 5.699 36.978 187 

FVA2 1.073 5.298 0.000 57.100 8.856 86.235 187 

FVA3 104.28 130.389 0.050 639.00 1.614 5.158 187 

FVL1 19.232 34.629 0.010 178.00 2.734 10.672 187 

FVL2 33.166 47.708 0.030 257.00 2.105 7.367 187 

FVL3 53.636 75.554 0.010 408.00 2.029 7.116 187 

ACS 5.689 0.664 4.000 7.000 -0.996 3.887 187 

AIN 1.957 0.848 0.000 3.000 -0.503 2.667 187 

AMF 3.561 0.688 2.000 5.000 -0.073 2.793 187 

AMA 18.567 3.652 11.000 26.000 -0.020 2.269 187 

ACF 0.481 0.501 0.000 1.000 0.075 1.005 187 

ACC 0.936 0.246 0.000 1.000 -3.557 13.652 187 

AFX 0.492 0.246 0.000 1.000 0.032 1.001 187 

ACG 0.663 0.474 0.000 1.000 -0.690 1.476 187 

ACI 4.118 0.662 3.000 5.000 -0.131 2.272 187 

BVS 12.396 14.321 -8.000 63.000 1.348 4.149 187 

EPS 3.083 9.457 -5.740 61.770 4.437 23.434 187 

FSZ 114.42 145.26 0.057 667.01 1.575 4.781 187 

FGE 48.941 20.547 7.000 99.000 0.023 2.986 187 

Source: Generated by the Author from Annual Reports of the Sampled Firms 

 

The descriptive results show wide variations in market and accounting variables of Nigerian consumer 
goods firms during the study period. Market Price per Share (MPS) averaged ₦88.09, ranging from ₦1 to 

₦1,557, with high dispersion and non-normal distribution indicated by strong positive skewness and kurtosis. 

For fair value measures, Level 1 assets (FVA1) averaged ₦1.61 billion, Level 2 assets (FVA2) ₦1.07 billion, and 

Level 3 assets (FVA3) ₦104.28 billion, all with large dispersions and extreme non-normality. On the liabilities 

side, Level 1 (FVL1) averaged ₦19.23 billion, Level 2 (FVL2) ₦33.17 billion, and Level 3 (FVL3) ₦53.64 billion, 

each also showing high variation and deviations from normal distribution. 

Audit committee attributes reflected moderate compliance with governance codes. Average size was 

about 6 members, generally consistent with CAMA 2020 and NCGC 2018 requirements, though some firms fell 

short. Independence averaged 2 non-executive directors, meeting minimum standards, while meeting frequency 

averaged 4 times yearly, aligning with quarterly requirements. Attendance was high, with an average of 19 

members present across sessions. Nearly 94% of committees were chaired by independent directors, and about 

half of the members possessed financial expertise. Gender diversity averaged 66% female representation, though 

some firms had none. Foreign membership was present in about half the firms. An Audit Committee Attributes 

Index (ACI) constructed from these dimensions averaged 4.12, suggesting relatively strong but uneven 

governance practices. 



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Other firm-specific variables also displayed wide variability. Book Value per Share (BVS) averaged 
₦12.39, ranging from negative values to ₦63, while Earnings per Share (EPS) averaged ₦3.08, with a wide range 

and high skewness. Firm size was substantial, averaging ₦114.42 billion in total assets but ranging widely from 

₦0.06 billion to ₦667 billion. Firm age averaged 49 years, with all firms established before 2012, and was the 

only variable showing normal distribution. 

Overall, the results demonstrate substantial heterogeneity across firms, with most financial and 

governance variables exhibiting skewed and non-normal distributions, reflecting differences in firm size, asset 

structures, governance composition, and market valuation within the Nigerian consumer goods sector. 

The analysis of the descriptive statistics revealed that the data for the variables of the study did not follow 

the normal distribution assumption of parametric analysis. However, to determine the statistical evidence with 

regards to the data normality, the study employed the Shapiro-Wilk Test for normal data. The results of the test 

are presented in Table 2. 

 

Table 2. Data Normality Test 

Variables W V Z Prob>Z N 

MPS 0.3432 92.675 10.379 0.0000 187 

FVA1 0.2891 100.037 10.561 0.0000 187 

FVA2 0.1061 125.790 11.086 0.0000 187 

FVA3 0.5212 67.297 9.652 0.0000 187 

FVL1 0.8589 19.854 6.852 0.0000 187 

FVL2 0.8652 18.972 6.748 0.0000 187 

FVL3 0.9902 1.383 0.743 0.2287 187 

ACI 0.9682 4.479 3.438 0.0003 187 

FVA1*ACI 0.7072 41.200 8.526 0.0000 187 

FVA2*ACI 0.1274 122.787 11.030 0.0000 187 

FVA3*ACI 0.7683 32.601 7.990 0.0000 187 

FVL1*ACI 0.9214 11.058 5.511 0.0000 187 

FVL2*ACI 0.8824 16.551 6.435 0.0000 187 

FVL3*ACI 0.9503 6.991 4.459 0.0000 187 

BVS 0.8512 20.940 6.975 0.0000 187 

EPS 0.4079 83.312 10.141 0.0000 187 

FSZ 0.9385 8.651 4.948 0.0000 187 

FGE 0.9727 3.841 3.086 0.0010 187 

Source: Generated by the Author from the Data of the Sampled Firms 

 

The Shapiro-Wilk test is a useful tool for testing normality. The null hypothesis principle is used in the 

Shapiro-Wilk (W) test for normal data; under the principle, the Null hypothesis that ‘the data is normally 

distributed’ is tested. Table 2 indicates that data from all the variables of the study are not normally distributed 

because the P-values are significant at a 1% level of significance (p-values of 0.0000), except for the FVL3, which 

is not statistically significant at all levels of significance (p-value of 0.2287). Therefore, the null hypothesis (that 

the data is normally distributed) is rejected for FRQ, MPS, ACI, FVA1, FVA2, FVA3, FVL1, FVL2, 

FVA1*ACI, FVA3*ACI, FVA3*ACI, FVL1*ACI, FVL2*ACI, FVL3*ACI, BVS, EPS, FSZ, and FGE, while 

not rejected for FVL3. This may lead to problems in OLS regression, hence the need for more generalized 

regression models. This has prompted the study to resort to SEM, because it uses techniques like Maximum 

Likelihood (ML) and Generalized Least Squares (GLS), and can handle complex error structures and 

correlations among error terms. 

Correlation Analysis 

Table 3 shows the correlation coefficients between the dependent and the independent variables. The 

asterisk beside the correlation coefficient shows the coefficient's significance level.  The correlation indicates the 

direction of the relationships as well as the strength of the relationship. Values of the correlation coefficient range 

from -1 to 1. The sign of the correlation coefficient indicates the direction of the relationship (positive or 

negative), and the absolute value of the correlation coefficient indicates the strength, with larger values indicating 

stronger relationships.  



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243 
 

Table 3.Correlation Matrix 

 
Variables 

M
P

S
 

F
V

A
1
 

F
V

A
2
 

F
V

A
3
 

F
V

L
1
 

F
V

L
2
 

F
V

L
3
 

A
C

I 

F
V

A
1
A

C
I 

F
V

A
2
A

C
I 

F
V

A
3
A

C
I 

F
V

L
1
A

C
I 

F
V

L
2
A

C
I 

F
V

L
3
A

C
I 

B
V

S
 

E
P

S
 

F
S

Z
 

F
G

E
 

MPS 1.000                  

FVA1 -0.046 1.000                 

FVA2 -0.032 0.019 1.000                

FVA3 0.063 -0.298*** 0.053 1.000               

FVL1 0.183** 0.288*** 0.172** -0.146** 1.000              

FVL2 0.057* 0.182** -0.122* 0.015 0.092 1.000             

FVL3 0.129* -0.064 -0.171** 0.087* -0.073* 0.090 1.000            

ACI 0.247*** -0.140 -0.117 -0.104 0.045 -0.046 0.064 1.000           

FVA1ACI -0.104 -0.526*** 0.068 0.264*** -0.025 -0.065 0.017 -0.319*** 1.000          

FVA2ACI 0.013 -0.020 -0.988*** -0.043 -0.179** 0.127* 0.169** 0.025 -0.036 1.000         

FVA3ACI 0.099 0.120 -0.067 0.302*** -0.049 0.096 -0.072 0.126* -0.241** 0.056 1.000        

FVL1ACI 0.096 -0.009 -0.228*** -0.041 -0.244*** 0.079 0.137* -0.098 0.198*** 0.246*** -0.106 1.000       

FVL2ACI 0.112 -0.023 0.154** 0.075 0.075 -0.321*** 0.179** -0.126* 0.100 -0.143* -0.002 0.071 1.000      

FVL3ACI 0.098 -0.006 0.199*** 0.055 0.127* 0.174** -0.341* -0.129* 0.008 -0.191*** 0.030 -0.209*** 0.376*** 1.000     

BVS 0.607*** -0.084* -0.082 0.089 0.084 -0.133* 0.165** 0.339*** 0.047 0.054 0.017 0.210*** 0.095 -0.131* 1.000    

EPS 0.779*** -0.035 -0.033 0.053* 0.219*** -0.017 0.103 0.209*** -0.093 0.015 0.078 0.100* 0.075 0.092 0.567*** 1.000   

FSZ 0.234*** -0.227*** -0.181** -0.018 -0.095 -0.283*** 0.205* 0.455*** -0.009 0.142* -0.040 0.091 0.064 -0.219** 0.542*** 0.266*** 1.000  

FGE 0.046 -0.122* -0.171** -0.049 -0.175** -0.089* 0.257*** 0.481*** -0.106 0.123* -0.011 -0.051 -0.106 -0.268*** 0.359*** 0.050 0.467*** 1.000 

 

Source: Generated by the Author from Results/Data of the Sampled Firm 



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The correlation analysis revealed mixed relationships between fair value measures and market prices of 

Nigerian consumer goods firms. Level 1 and Level 2 fair value assets showed weak, insignificant negative 

correlations with MPS, indicating low value relevance. Level 3 assets and Level 2 liabilities exhibited weak 

positive but insignificant associations with MPS, also suggesting limited decision usefulness. By contrast, Level 

1 and Level 3 liabilities displayed significant positive correlations with MPS at the 5% and 10% levels, 

respectively, implying that these liability measures were value relevant to investors. 

Audit committee attributes (ACI) were significantly and positively correlated with MPS at the 1% level, 

suggesting that stronger governance structures enhance reporting quality and investor confidence. However, 

when FVA variables were moderated with ACI, only FVA1*ACI showed a negative but insignificant 

relationship with MPS, while all other moderated interactions (FVA2*ACI, FVA3*ACI, FVL1*ACI, 

FVL2*ACI, FVL3*ACI) were positive but statistically insignificant, indicating no meaningful improvement in 

value relevance. 

Traditional accounting measures showed stronger associations. BVS and EPS both had highly significant 

positive correlations with MPS at the 1% level, confirming their central role in valuation and financial reporting 

quality. Firm size was also positively significant, while firm age showed a positive but insignificant relationship, 

suggesting that size matters more than longevity in explaining firm value. 

In conclusion, the results demonstrate that only Level 1 and Level 3 liabilities are significantly value 

relevant, whereas most fair value assets and moderated measures are not. Conventional measures (BVS, EPS, 

and firm size) remain the most reliable indicators of firm value. Furthermore, the absence of excessively high 

correlation coefficients (above 0.80) indicates no multicollinearity among independent variables, confirming the 

suitability of the Dataset for regression analysis. 

 

Regression Diagnostic Tests 

To ensure the reliability of results, the study conducted several robustness checks, including tests for 

normality, heteroskedasticity, multicollinearity, model specification, and SEM model fit. The Breusch-

Pagan/Cook-Weisberg test confirmed the absence of heteroskedasticity in both models, indicating constant error 

variance. Multicollinearity was also ruled out, as the mean Variance Inflation Factors (1.46 and 1.94) were well 

below the threshold of 10. Model specification tests (Ramsey RESET and Linktest) showed no omitted variables 

or misspecification, confirming the correctness of the regression models. 

For SEM, model fit was assessed using multiple indices. The Chi-square test was non-significant (χ² = 

6.45, p = 0.092), suggesting the model adequately reproduced the data. Other fit indices supported this 

conclusion: RMSEA (0.079) and SRMR (0.0122) fell within acceptable ranges, while CFI (0.998) exceeded the 

0.95 benchmark. Although TLI (0.886) was slightly below the ideal cutoff, overall indices indicated a good fit. 

These results demonstrate that the models are statistically sound, free of major violations of classical 

assumptions, and adequately capture the relationships among variables, providing a reliable basis for hypothesis 

testing. 

 

Path Analysis (Regression Analysis) and Hypothesis Testing 
In this section, the regression results obtained are analyzed and interpreted to generate findings that 

address the research objectives. The results are presented in Table 4. They show the standardized path 

coefficients of the variables, their respective significance levels, and the variances explained for the direct and 

moderated effects model. 
  



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Tables 4. Path Coefficients Model 1 & 2 

 Model 1 (Unmoderated Model) Model 2 (Moderated Model) 

Variables Coefficients P-Value Coefficients P-Value 

MPS<---BVS 0.325 0.000 0.353 0.000 

MPS<---EPS 0.599 0.000 0.574 0.000 

MPS<---FVA1 -0.046 0.324 -0.106 0.062 

MPS<---FVA2 0.009 0.832 0.097 0.767 

MPS<---FVA3 -0.015 0.743 -0.020 0.684 

MPS<---FVL1 -0.006 0.894 -0.001 0.985 

MPS <---FVL2 0.085 0.061 0.114 0.036 

MPS <---FVL3 0.049 0.270 0.034 0.521 

MPS <---ACI 0.112 0.030 0.091 0.142 

MPS <---FVA1*ACI   -0.098 0.093 

MPS <---FVA2*ACI   0.103 0.752 

MPS <---FVA3*ACI   0.012 0.793 

MPS <---FVL1*ACI   -0.027 0.605 

MPS <---FVL2*ACI   0.078 0.192 

MPS <---FVL3*ACI   0.011 0.862 

MPS <---FSZ -0.091 0.123 -0.093 0.110 

MPS <---FGE -0.124 0.022 -0.120 0.028 

R-Square 0.676  0.688  

Chi-Square (χ²) 7.831 0.082 6.450 0.092 

Source: Results Output from IBM AMOS 

 

The regression analyses, both unmoderated and moderated, provide valuable insights into the value 

relevance of FVA and the moderating role of audit committee attributes in Nigerian consumer goods firms. 

The unmoderated model explained 67.6% of the variation in MPS, suggesting strong explanatory power. 

The results revealed that BVS and EPS exert a positive and highly significant effect on MPS at the 1% level. This 

confirms their strong value relevance and demonstrates that investors in Nigeria continue to rely heavily on 

conventional indicators such as earnings and book value in making valuation decisions. The finding is consistent 

with prior evidence from both developed and emerging economies (Barth et al. 2001; Ohlson 1995; Abubakar, 

2018; Eshiett et al. 2023). 

By contrast, most fair value measures were not significantly related to MPS. Specifically, Level 1 fair 

value assets (FVA1) and liabilities (FVL1) both exhibited insignificant negative effects on firm value. This 

supports Hypothesis 1 (H1), which stated that Level 1 items are not value relevant to Nigerian investors. 

Similarly, Level 3 assets (FVA3) and liabilities (FVL3) were also insignificant, supporting Hypothesis 3 (H3) 

that Level 3 measures lack value relevance. On the other hand, Level 2 results were mixed. While Level 2 assets 

(FVA2) showed an insignificant positive effect, Level 2 liabilities (FVL2) displayed a positive and significant 

relationship with MPS at the 10% level. This leads to the rejection of Hypothesis 2 (H2), since Level 2 liabilities 

are considered value relevant by Nigerian investors. Finally, a comparison across the hierarchy levels suggests 

that Level 1 items are not more value relevant than Level 2 or 3 items, which supports Hypothesis 4 (H4). 

Collectively, the unmoderated results demonstrate that while BVS and EPS are highly valued by investors, fair 

value information is largely ignored, except for Level 2 liabilities. 

These findings align with Song et al. (2010) and Chukwu et al. (2020), who reported that investors’ 

perception of financial reporting quality is not strongly associated with fair value disclosures, attributing this to 

the learning curve and the predominance of unsophisticated investors in Nigeria. However, the results contradict 

those of Siekkinen (2016) and Tsadira (2020), who concluded that fair value assets at all levels were value 

relevant to investors’ decisions. They also diverge from Mohammed (2020), who provided strong evidence that 

Level 1 fair value assets offered a reliable Explanation of stock prices in Jordan. 

The control variables provided additional insights. Firm size had a negative but insignificant effect on 

MPS, suggesting that larger firms are not necessarily valued more highly in the Nigerian consumer goods sector. 

Firm age, however, had a significant negative effect at the 5% level, indicating that older firms tend to lose value 

relevance over time. This may reflect the market’s preference for more agile and innovative firms in a dynamic 

economic environment. 

Turning to the moderated model, the results show that the interaction of audit committee attributes (ACI) 



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with FVA marginally improved explanatory power, as the adjusted R-squared increased to 68.8%. However, the 

interaction effects themselves were largely insignificant. The only exception was FVA1ACI, which hurt MPS 

and was significant at the 10% level. This suggests that investors perceive Level 1 assets, even when combined 

with stronger audit committees, as subject to discretionary accruals and therefore discount their value. All other 

moderated interactions, FVL1*ACI, FVA2*ACI, FVL2*ACI, FVA3*ACI, and FVL3*ACI, were statistically 

insignificant, indicating that audit committees did not enhance the relevance of these fair value measures. 

At the same time, the results confirm Song et al. (2010), who argued that weaker corporate governance 

reduces the relevance of fair value disclosures, and align with Tama-Sweet and Zhang (2015), who showed that 

governance structures shape the pricing of fair value information. Furthermore, they support Velte (2017), who 

found that gender diversity in boards enhances the value relevance of FVA under IFRS 13. The findings therefore 

confirm Hypothesis 5 (H5), which posits that audit committee attributes have no significant moderating effect 

on the value relevance of fair value measures. 

This limited moderating role of audit committees is not unique to Nigeria. Cohen et al. (2008), drawing 

on institutional theory, argued that audit committees often perform ceremonial rather than substantive 

monitoring duties. Similarly, Beasley et al. (2000) observed that audit committee oversight varies widely, but is 

often inadequate. More critically, Krishnan et al. (2011) provided evidence that audit committees may even be 

associated with less accurate reporting and a higher likelihood of fraud, supporting the notion of managerial 

hegemony. In the same vein, Bruynseels and Cardinaels (2014) reported that audit committees are linked to a 

lower likelihood of disclosing internal control deficiencies or receiving going concern opinions, while Wilbanks 

et al. (2017) revealed that audit committees are often less alert to fraud risk, thereby enabling greater earnings 

management. Taken together, this body of evidence helps explain why audit committee attributes in Nigerian 

consumer goods firms failed to strengthen the value relevance of FVA: they may exist more in form than in 

substance, with limited capacity or willingness to constrain managerial discretion. 

Overall, the findings highlight several important patterns. Traditional accounting measures, namely BVS 

and EPS, remain the most value-relevant to Nigerian investors, reaffirming their dominance in valuation 

decisions. Fair value assets and liabilities are generally not priced by investors, except Level 2 liabilities, which 

appear to provide useful information about firms’ obligations. Audit committee attributes, despite being 

associated with governance quality, do not significantly moderate the relationship between FVA and firm value. 

This underscores persistent institutional weaknesses, limited investor confidence, and enforcement challenges 

in Nigeria’s capital market. 

In sum, the evidence demonstrates that while fair value accounting is conceptually intended to improve 

reporting relevance, Nigerian investors remain skeptical of its usefulness. Instead, they continue to depend on 

traditional accounting measures that are perceived as more reliable. The limited moderating effect of audit 

committees further points to the need for stronger governance mechanisms, improved expertise, and stricter 

regulatory oversight if FVA is to achieve its intended role in enhancing financial reporting quality in Nigeria. 

 

 

CONCLUSION 

 
The study examined the value relevance of fair value accounting in Nigerian consumer goods firms and 

the moderating role of audit committee attributes. The results showed that traditional measures—book value 

per share and earnings per share remain highly value relevant, while most fair value measures are not, except 

for Level 2 liabilities, which investors found useful. Audit committee attributes did not significantly moderate 

the relationship between FVA and firm value, confirming weak governance influence. Overall, the evidence 

suggests that Nigerian investors still rely more on conventional indicators, reflecting skepticism about fair value 

reporting and the limited effectiveness of audit committees. 

The study recommends that regulators such as the FRCN, SEC, and NGX strengthen disclosure 

requirements for fair value estimates, enforce compliance with IFRS, and enhance monitoring of corporate 

governance practices. Boards and audit committees should improve oversight by including more independent, 

financially skilled, and diverse members, while also providing continuous training to strengthen vigilance. Firms 

should invest in robust valuation processes, internal controls, and transparent communication to build investor 

trust in fair value reporting. Finally, investors should combine reliance on traditional measures like earnings and 

book value with informed interpretation of fair value data, supported by investor education programs to reduce 

knowledge gaps and improve market efficiency. 

 

 



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