FAIR VALUE MEASUREMENT TECHNIQUES AS PREDICTORS OF INVESTORS’ CONFIDENCE AMONG MANUFACTURING FIRMS IN LAGOS STATE
Keywords:
Fair value measurement, Market Approach, Income Approach, Cost Approach, Investor confidenceAbstract
This study examined the effect of fair value measurement techniques on investor confidence among selected manufacturing firms in Lagos State, Nigeria. Specifically, it investigated the individual and joint effects of the Market, Income, and Cost Approaches on investor confidence. A descriptive survey research design was adopted. The study population comprised 1,207 investors and managers, from which 360 respondents were selected using purposive and simple random sampling techniques. Data were collected through a structured questionnaire and analysed using regression analysis at the 0.05 level of significance. The findings revealed that the Market Approach had a significant positive effect on investor confidence (β = 0.458, t = 5.15, p < 0.001), explaining 49.1% of the variation in investor confidence. The Income Approach also had a significant positive effect (β = 0.421, t = 5.13, p < 0.001), explaining 44.1% of the variation, while the Cost Approach significantly influenced investor confidence (β = 0.389, t = 4.14, p < 0.001), explaining 35.2% of the variation. These percentages were obtained from three separate simple regression models, whereas the combined result was derived from a multiple regression model. The combined regression analysis showed that the three approaches jointly had a significant effect on investor confidence (R² = 0.612, F = 39.18, p < 0.001). The Market Approach (β = 0.338) was the strongest predictor, followed by the Income Approach (β = 0.291) and the Cost Approach (β = 0.214). The study concluded that fair value measurement techniques significantly determine investor confidence, with market-based valuation providing the highest level of credibility because of its reliance on observable market data. It recommended that manufacturing firms strengthen transparent fair value measurement practices, disclose valuation assumptions, and improve compliance with IFRS 13 to promote investor confidence and attract sustainable investment.
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