Hedge accounting and the value of manufacturing firms in Nigeria

Abstract

The study was conducted to examine the influence of hedge accounting variables on firm value of listed manufacturing firms in Nigeria. This was conceived due to the fact that the business environment is volatile, complex, multifaceted and risky and uncertainties being the order of the day, since most of the assets and liabilities of manufacturing companies in Nigeria have derivative features. Ex-post facto research design was adopted in the study using Secondary data obtained from the annual reports of the 42 sampled listed manufacturing firms for the period 2013 to 2022, the nature of the data was panel. Market value of the firms was the dependent variable, while exchange rate, interest rate, and leverage were the independent variables. Data were analyzed using Ordinary Least Squares (OLS) regression technique. Results revealed that exchange rate and interest rate were statistically significant (P-value 0.0005 and 0.0072) while leverage was not (P-value 0.5509). The coefficient of variation was 0.9603%, meaning the variables of the study account for 96.03% of the variation in firm value while 3.97% by other variables not captured in the model. It was concluded that, hedge accounting practices influence firm value of listed manufacturing companies in Nigeria. It was recommended that hedge accounting practices be standardized to reduce incidences of incurring excessive losses.