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Navigating Hyperinflation: The Role of Accounting Information in Enhancing Value Relevance in Emerging Economies

Author

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  • Newman WADESANGO

    (University of Limpopo, Republic of South Africa)

  • Panashe Hillary NYAKUYA

    (Midlands State University, Zimbabwe)

Abstract

This research explores the unique challenges and financial reporting practices in hyperinflationary settings, focusing on Lester Quality Products as a case study. The study defines hyperinflation, evaluates the role of International Accounting Standard (IAS) 29 Financial Reporting in Hyperinflationary Economies in enhancing the quality of financial reporting, and highlights the need for manufacturing firms to adapt their financial statements. Using a mixed-methods approach, data was collected through questionnaires and interviews with key stakeholders. The findings reveal that hyperinflation distorts valuations of money and assets, complicating the assessment of LQP’s actual performance and stability. As a remedy, financial statements require restatement to reflect the rapid erosion of purchasing power, employing techniques such as the Current Purchasing Power method and General Price Level Accounting. This study underscores the urgency of investing in accounting training programs to alleviate the shortage of qualified professionals, while emphasizing the need for robust regulatory oversight to ensure financial statement integrity. By addressing these critical issues, the research provides valuable insights for policymakers, practitioners, and academics worldwide, enhancing the relevance and precision of financial reporting in hyperinflationary economies.

Suggested Citation

  • Newman WADESANGO & Panashe Hillary NYAKUYA, 2025. "Navigating Hyperinflation: The Role of Accounting Information in Enhancing Value Relevance in Emerging Economies," CECCAR Business Review, Body of Expert and Licensed Accountants of Romania (CECCAR), vol. 5(12), pages 59-72, December .
    • Handle: RePEc:ahd:journl:v:5:y:2025:i:12:p:59-72
    DOI: 10.37945/cbr.2024.12.07
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    References listed on IDEAS

    as
    1. Dillard, Jesse & Vinnari, Eija, 2019. "Critical dialogical accountability: From accounting-based accountability to accountability-based accounting," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 62(C), pages 16-38.
    2. Eddie Chamisa & Musa Mangena & Hamutyinei Harvey Pamburai & Venancio Tauringana, 2018. "Financial reporting in hyperinflationary economies and the value relevance of accounting amounts: hard evidence from Zimbabwe," Review of Accounting Studies, Springer, vol. 23(4), pages 1241-1273, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    hyperinflation; financial reporting; IAS 29; Current Purchasing Power; General Price Level Accounting; regulatory oversight;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M49 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Other
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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