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Assessing the value relevance of fair value measurements: A South African perspective

Matsane, Ayanda; Nakpodia, Franklin; Areneke, Geofry

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Ayanda Matsane

Geofry Areneke


Purpose This paper aims to explore whether fair value Levels 1 and 2 measurements are more value relevant than Level 3 fair value measurements in a less-active market. Specifically, this research addresses two objectives. Firstly, it examines the value relevance of fair value measures for each disclosure level of fair value. Secondly, it assesses the impact of corporate governance on the value relevance of less observable fair value disclosures (Levels 2 and 3). Design/methodology/approach Drawing insights from agency theorising, this research adopts a quantitative approach (regression analysis) that investigates data from a less active financial market (South Africa). Findings Contrary to agency theory suppositions, the results show that investors in a less active market value management inputs more than market (more transparent) information. The authors also observe that investors pay limited interest to corporate governance structures when pricing fair value measurement, implying that they rely on factors beyond corporate governance mechanisms. Originality/value The authors’ findings offer useful evidence to standard setters and preparers of financial information. While the International Accounting Standard Board suggests that investors value transparent financial information, the data shows that investors in less-active markets value management’s inputs more than those of the market.


Matsane, A., Nakpodia, F., & Areneke, G. (2022). Assessing the value relevance of fair value measurements: A South African perspective. Corporate Governance, 22(7), 1405-1424.

Journal Article Type Article
Acceptance Date Apr 24, 2022
Online Publication Date May 20, 2022
Publication Date Oct 12, 2022
Deposit Date May 5, 2022
Publicly Available Date May 20, 2022
Journal Corporate Governance: The International Journal of Business in the Society
Print ISSN 1472-0701
Publisher Emerald
Peer Reviewed Peer Reviewed
Volume 22
Issue 7
Pages 1405-1424
Public URL


Accepted Journal Article (345 Kb)

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Copyright Statement
This author accepted manuscript is deposited under a Creative Commons Attribution Non-commercial 4.0 International (CC BY-NC) licence. This means that anyone may distribute, adapt, and build upon the work for non-commercial purposes, subject to full attribution. If you wish to use this manuscript for commercial purposes, please contact

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