An analysis of the effect of IFRS adoption in Nigeria on the quality of published financial information

Temile, SO

Abstract

The study examines the effects of the adoption of International Financial Reporting Standards (IFRS) on the quality of published financial statements in Nigeria. The study uses entire non-financial firms listed on the floor of the Nigeria Stock Exchange. The study uses eighty-seven (87) firms over a 10 years period, five years pre IFRS adoption (2007 to 2011) and five years post IFRS adoption (2012 to 2016), making a total of 870 firm years observation. To measure value relevance of firms’ post IFRS adoption, the study modifies the Müller (2014) model to determine whether the adoption of IFRS has increased the value relevance of accounting information in the sampled firms. The results show that the adjusted R-Square in the post IFRS adoption is higher than the pre-IFRS adoption indicating a more value relevance of published financial information after IFRS adoption. On whether there is incremental value relevance, the results show fluctuations (in years) in adjusted R-Squared from 2007 to 2016 with more noticeable decrease in 2008, 2009, 2012 and 2016 and hence results could not ascertain if IFRS leads to incremental value relevance of financial reporting in Nigeria. To measure earnings management, the modified Jones (1995) model is used and the results revealed a significant decrease in discretionary accrual, indicating a decrease in earning management in post IFRS adoption in Nigeria. Conclusively, the different tests carried out provide compelling evidence that the adoption of IFRS in Nigeria has positively and significantly impacted on the quality of published financial information by significantly increasing the value relevance of financial information and as well as significantly reducing earnings mismanagement in Nigeria. Significantly, this study is the first to empirically examine the effect of the adoption of IFRS in Nigeria on the quality of published financial statements by combining value relevance and earnings management measures through transparent and quantitative financial information. This study therefore recommends that the Nigerian government should empower the relevant bodies/ authorities to seek out and incorporate more measures to further improve the quality of financial reporting in order to increase the quality of published accounting information.
Keywords: IFRS, accounting information, value relevant, earnings management, N-GAAP.

Citation

Temile, S. (in press). An analysis of the effect of IFRS adoption in Nigeria on the quality of published financial information. (Thesis). University of Salford

• Thesis Type: Thesis
• Acceptance Date: Jul 31, 2018
• Deposit Date: Sep 25, 2018
• Publicly Available Date: Sep 25, 2018