Accounting for Marketable Securities and Corporate Financial Performance in Nigeria

This study aimed at examining the systems of accounting for marketable securities in Nigeria with a view to determine the impact of the accounting systems and the classification of Marketable Securities (MS) on the financial performance of banks. To achieve the above objective research questions were raised, hypotheses were formulated, and a review of related literature was made. In order to generate the necessary data for this study, data were sourced from the financial statements of banks and the Central Bank of Nigeria (CBN) statistical bulletin for a period of 15 years, i.e. 1995 – 2009. The data generated for the study were analyzed with the multiple regression analysis. Our findings indicated that, the unrealized gains arising from the classification of MS as current asset is a reduction to net income while the unrealized gains arising from the classification as non-current asset is a reduction to net asset. Based on the above findings, it was recommended that where marketable securities are debt instruments; they should be classified as current asset (temporary investment). But they should be classified as noncurrent assets (long-term investment) where they are equity instruments.