THE EFFECT OF COST APPROACH AND CORPORATE PROFITABILITY OF LISTED CEMENT FIRMS IN NIGERIA
Abstract
This study empirically investigates the effect of the cost approach to fair value measurement on the corporate profitability of listed cement firms in Nigeria, measured by Return on Capital Employed (ROCE) and Return on Equity (ROE). Grounded in Agency Theory, the research employs an ex-post facto design, analysing secondary data from the annual reports of Dangote Cement Plc, BUA Cement Plc, and Lafarge Africa Plc over a five- year period. The findings reveal a statistically significant positive relationship, with the cost approach explaining 24.0% and 25.1% of the variances in ROCE and ROE, respectively. The results indicate that in this asset-intensive sector operating within a volatile economic context, the cost approach, by providing a conservative, replacement-cost-based valuation, enhances the reliability of financial statements and leads to more meaningful assessments of capital efficiency and shareholder returns. The study concludes that the cost approach is a critical valuation technique for aligning reported asset values with contemporary economic realities in emerging markets, thereby offering valuable insights for standard- setters, regulators, and firm management
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Published in JOURNAL OF BUSINESS & ECONOMY
ISSN: 2808-5428
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