A Study of the Financial Reporting Dichotomy of Managers' Perceived Usefulness of the Value Added Statement

The value added statements' (VAS) literature has been overwhelmingly normative and generally strongly suggested companies should produce a VAS, as did the Nigerian Accounting Standards Board in its Statement of Accounting Standards (NASB, 1984). This study investigated whether the perceived usefulness of the Nigerian VAS conformed to what the managers, as preparers, had envisioned the VAS to accomplish. Using methods pioneered in the empirical literature about the effects of information provision on managers, senior managers in two companies were interviewed about their past, current, and future views concerning the VAS. One company produced a VAS while the other did not produce one even when the Nigerian government made it mandatory. Empirical research about VAS is rare, especially the reasons for nonproduction of a VAS. The collection of interview data at the individual manager level enabled the findings to be compared with various aspects of the VAS literature, including emerging economies, finance studies in the United States, and normative literature in South Africa and UK studies. The non-VAS company respondents strongly considered the government to be the main user, compared with the employees as main users in UK studies. Our findings had some strong support for shareholders as did the United Kingdom. The majority of the VAS-producing respondents noted that a VAS might not be useful to employees, but could be used to measure productivity, demonstrating the function of VAS as a complementary performance indicator. The non-VAS company respondents did not know if a VAS measured productivity, as it was merely a rearrangement of the Income Statement and thus similar to UK views. The paper also provides suggestions for further research with both VAS and other financial representatives