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The Effect of International Financial Reporting Standards (IFRS) Adoption on the Performance of Firms in Nigeria

Journal of Administrative and Economics Science

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Title The Effect of International Financial Reporting Standards (IFRS) Adoption on the Performance of Firms in Nigeria
 
Creator Tanko, Muhammad .
 
Description Presented Paper in International Financial Reporting Standards (IFRS) Conference - Challenges & Opportunities 1st – 2nd May, 2012 Organized by College of Business & Economics, Qassim University, Saudi ArabiaAbstract. This  paper  assesses  the  effect  of  compliance  with  the  regulation  and  provisions  of  the international  financial  reporting  standards  on  the performance  of  some  selected  Nigerian  banks  that  are quoted  on  the  Nigerian  stock  market.  The  paper  defines  the  change  in  performance  based  on  two parameters.  First,  change  in  Accounting  Quality  of the  firms,  for  which  we  used  such  variables  as; earnings  management,  and  timely  loss  recognition.  Secondly  we  measure  the  performance  of  the  firms based on changes on identified financial ratios of the firms. We tested the impact of adoption as it relates to profitability, growth, leverage, and liquidity performance. The paper utilizes secondary data to tests the effects of the adoption of IFRS on the performance of the selected firms in Nigeria. Logit regression and t-test were used in the analysis. The paper finds that variability of earnings has decreased from an average of  32624.4  to  14432.2  which  suggest  that  there  was low  variability  in  earnings  in  the  post  adoption period.  Timely  loss  recognition  is  the  measure  for prevalence  of  large  negative  earnings  where  large negative results suggest that the loss recognition is not timely in the post adoption period. For our study, we  found  LNEG  to  be  positive  which  signifies that  IFRS  firms  recognize  losses  more  frequently  in  the post  adoption  period  than  they  do  in  the  pre  adoption  period,  we  therefore  conclude  that  accounting quality improves after the adoption of IFRS. Furthermore, under IFRS firms tend to exhibit higher values on  a  number  of  profitability  measures,  such  as  earnings  per  share  (EPS).  It  is  our  recommendation  that comprehensive  implementation  of  the  standard  to  its  totality  by  firms  should  be  encouraged  and regulatory  authorities  such  as  the  Securities  and  Exchange  Commission,  and  Stock  exchange  markets should monitor strict compliance with the adoption and provisions of the standards. Furthermore, external auditors have role to play in ensuring strict compliance to the provisions of the standards.  Keywords:  Earnings  Management,  IFRS  Adoption,  Nigerian  Banks,  Performance,  and  Timely  Loss Recognition.
 
Publisher Qassim University Academic Publishing and translation
 
Contributor —
 
Date 2012-04-26
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
—
 
Format application/pdf
 
Identifier http://publications.qu.edu.sa/ojs/index.php/economic/article/view/508
 
Source Journal Of Administrative And Economics Science; Vol 5, No 2
 
Language eng
 
Relation http://publications.qu.edu.sa/ojs/index.php/economic/article/view/508/494