Does Compliance with Accounting Standards Disclosure Requirement Matter on the Value Relevance of Other Comprehensive Income Items in Nigeria

Abstract

Convergence with International Financial Reporting Standards (IFRS) has required Nigerian companies to recognize fair value gains and losses in statements of comprehensive income. The main objective of this study is to investigate the influence of compliance with International Accounting Standards (IAS) 16, IAS 19, and IFRS 7 on the value relevance of the components of other comprehensive income. Using 259 firm-year observations, the results of pooled ordinary least square regression show that compliance with relevant accounting standards are positively priced by investors. In further analysis, the results show that compliance enhances the value relevance of the components of other comprehensive income. One primary recommendation of the study is that reporting entities should pursue compliance of IFRS standards to improve the financial reporting process and consequently increase investors’ perceived reliability of accounting information.