Activity-Based Costing and Firm’s Value of Manufacturing Companies in Nigeria

Abstract

This study focuses on Activity-Based Costing (ABC) and firm’s value. An ex-post facto research design was employed. Data were collected and statistically analysis using multiple regression. The results show that ABC effectiveness is significantly and positively related to firm’s value. The results show that ABC effectiveness is significantly and positively related to firm’s value. The result indicates that firms with greater degree of cost accountant competency, corporate resource facilitation, and price competitive force appear to have a higher effect on cost driver fitness, cost calculation accuracy, cost information creditability and cost reporting usefulness. The cost accountant competency, whose knowledge, skill, coordinate, knowledge sharing and competence, is very necessary in organization to ensure that cost accountants can do task in their responsibility completely and to achieve goals. Managers and executives of firms should apply the relationship among ABC effectiveness and firm’s value to the actual business situation. Managers should effectively utilize the resource and capability of the firm in order to ABC effectiveness. Clearly understanding of ABC effectiveness can help gain competitive advantages and achieve higher level of firm’s value. Importantly, to maximize the benefits of ABC effectiveness, they should provide resources such as cost accountant competency, resource facilitation to support in order to ABC effectiveness and to increase firms' competitive advantage and crucially to gain firm’s value.

Keywords: Activity-Based Costing Effectiveness, Cost Calculation Accuracy, Cost Driver Fitness ,Cost Information Creditability, Cost Reporting Usefulness, Firm’s value.