The Effects of International Financial Reporting Standards on the Quality of Financial Statements in Nigeria Listed Companies
1Omoniyi Alabi ADEOSUN (Ph.D), 2Mayowa AYEDOGBON
1,2Department of Accounting, Bamidele Olumilua University of Education, Science and Technology, Ikere-Ekiti. Ekiti State, Nigeria.
https://doi.org/10.47191/jefms/v8-i2-07ABSTRACT:
The study of the effects of international financial reporting standards on the quality of financial statements in Nigeria listed companies seeks to understand how the implementation and adherence to the accounting standards influence the overall quality of financial reporting by entities. Additionally, it explored the implications of non-compliance or selective application of such standards on the accuracy and transparency of financial statements. The study adopted cross-sectional design which comprise of the 151 companies that were listed in the 11 sectors on the Nigerian Stock Exchange. Purposive random sampling technique was used to select 400 respondents from five selected companies. The statistical instrument employed to examine the different hypotheses presented in the study is the analysis of variance (ANOVA). The Statistical Package for Social Sciences (SPSS) tool, version 20, was used to examine the data. The result shows that faithful presentation of financial statements, and comparability of financial statements have significant effect on the relevance, verifiability, timeliness, understandability and hence quality of the financial statements in selected companies in Nigeria. The study recommends that companies should endeavour to adhere to international financial reporting standards in the preparation and presentation of their financial statements in order to remain competitive globally and for effective and aggregate control of cash and budget management and for accurate financial statements.
KEYWORDS:
Accounting standards, financial statements, IAS, GAAP, Accounting policies
REFERENCES:
1) Abdalmuttaleb Musleh Al-Sartawi, & Reyad, S. (2018). Signaling Theory and the
2) Determinants of Online Financial Disclosure. Journal of Economic and Administrative Sciences, 34(3), 237-247. doi:https://doi.org/10.1108/JEAS-10 2017-0103.
3) Achim, A. M., & Chiş, A. O. (2014). Financial accounting quality and its defining characteristics. Sea - practical application of science, volume ii (issue 3 (5)), 93–94.
4) Alexander, D., Britton, A., &Jorissen, A. (2017). International Financial Reporting and Analysis
5) Biddle,G., Gilles, H.& Verdi, R. (2009). How Does Financial Reporting Quality Improve Investment Efficiency? Journal of Accounting and Economics, vol.48 (2-3):112-131
6) Braam, G and Beest, F, (2013). Conceptually-Based Financial Reporting Quality Assessment. An Empirical Review Analysis on Quality Differences Between UK Annual reports and US 10-K Reports, Working paper.
7) DeFond, Mark L., et al. “The Impact of Accounting Standards on Earnings Quality: Evidence from U.S. Firms.” Journal of Accounting Research, vol. 48, no. 4, 2010, pp. 10071038.
8) Dumisani, R. M. (2019). A Quality Financial Report: Concept Paper. International Journal of Social Sciences and Educational Studies, 5(3), 167-177. https://doi.org/10.23918/ijsses.v5i3p167.
9) Elbannan, M. (2011). Accounting and stock market effects of international accounting standards adoption in an emerging economy. Rev Quantitative Financial Accounting, no.2: 207-245, vol.36
10) Fasina, H.T. & Adegbite, T.A. (2014). Empirical Analysis of the effect of International
11) Financial reporting Standards (IFRS) Adoption on Accounting Practices in Nigeria.Archives of Business Research,2(2),1-14.
12) Financial Accounting Standards Board. “Statement of Financial Accounting Concepts
13) No. 1: objectives of Financial Reporting by Business Enterprises.” FASB, Print.
14) Gajevszky, A. (2015). Assessing financial Reporting Quality: Evidence from Romania. Audit Financial, (1583- 5812).
15) Hendrikson, Robert E. Financial Reporting and Analysis. 2nd ed., South-Western College Publishing, 2016.
16) Horngren, Charles T., Gary L. Sundem, and John A. Elliott. Introduction to Financial Accounting. 10th ed., Pearson, 2013.
17) Huang, Y., & Yan, C. (2020). Global Accounting Standards, Financial Statement Comparability, and the Cost of Capital. International Review of Economics and Finance, 69(8), 301–318. https://doi.org/10.1016/j.iref.2020.05.019.
18) Kaymaz, Ö.,Kaymaz, Ö., & Güvemli, B. (2021). Testing Dividend Signaling Theory in Turkey as An Emerging Market: Empirical Evidence from Public Firms Listed in Borsa Istanbul. MuhasebeVeFinansmanDergisi, 59-92.
19) Kieso, Donald E., Jerry J. Weygandt, & Terry D. Warfield. Intermediate Accounting. 17th ed., Wiley, 2020.
20) Matar, Ahmed A., & Sawatii, Hossam A. “The Importance of Financial Disclosure for Investors.” International Journal of Business and Management, 14(3), 2019, pp. 145156.
21) Nobes, C., & Parker, R. (2016). Comparative International Accounting
22) Okafor, C., Ezeagba, C., and Nwakoby, I.( 2018). "The Effect of IFRS Adoption on the
23) Quality of Financial Statements of Nigerian Banks." Journal of Accounting and
24) Financial Reporting,
25) Onaolapo, R.A. & Adebayo, M. (2023). Effect of International Financial Reporting Standards Adoption on the Performance of Nigerian Manufacturing Companies. AJEC 4(2). Print ISSN: 2734-2670. Online: 2756-374X
26) IAS 1—Presentation of Financial Statements:https://www.iasplus.com/en/standards/ias/ias1 IAS 8— Accounting Policies, Changes in Accounting Estimates and Errors. https://www.iasplus.com/en/standards/ias/ias8
27) IFRS 7 — Financial Instruments: Disclosures:
28) https://www.iasplus.com/en/standards/ifrs/ifrs7
29) Izedonmi, F. O. (2001). “Accounting Standards and Their Role in Financial Reporting.” International Journal of Business and Management, 6(5), 2001, pp. 123-130.
30) Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2016). Intermediate Accounting
31) Kaymaz, Ö.,Kaymaz, Ö., and Güvemli, B. (2021). Testing Dividend Signaling Theory in Turkey as An Emerging Market: Empirical Evidence from Public Firms Listed in Borsa Istanbul. MuhasebeVeFinansmanDergisi, 59-92.
32) Larson, K. D., & Jensen, R. E. (2018). Fundamental Accounting Principles
33) Okafor, C., Ezeagba, C., and Nwakoby, I. "The Effect of IFRS Adoption on the Quality of Financial Statements of Nigerian Banks." Journal of Accounting and Financial Reporting, 2018.
34) Pangaribuan, h., sunarsi, d., santoso, a., &wahyuni, e. S. (2023). Quality of financial statement and the factors that influence it. Jurnalakuntansi, 27(01), 176–196.
35) Scott, W. R. (2015). Financial Accounting Theory
36) Schroeder, Richard G., Myrtle W. Clark, and Jack M. Cathey. Financial Accounting Theory and Analysis: Text and Cases. Wiley, Print.
37) Santoso, B., Widodo, W., Muhammad, T. A., Khaliq, A., &Rahmat, H. S. (2022). The Determinant of Sukuk Rating: Agency Theory and Asymmetry Theory Perspectives. Risks, 10(8), 150.
38) Yasar, B., Martin, T., and Kiessling, T. (2020). An Empirical Test of Signalling Theory. Management Research Review, 43(11), 1309-1335. doi:https://doi.org/10.1108/MRR08-2019-0338.
39) Tandiayu, L., &Triani, N. V. (2023). The Effect of the Application of Financial
40) Accounting Standards on the Quality of the Company’s Financial Statements. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.4512243
41) Tang Q. Chen H, Zhijun L, (2008). Financial reporting quality and investor protection: a global investigation, Working Paper.
42) Walimbwa, e. J. (2016). Impact of accounting standards on quality of financial reporting. A case study of multichoiceuganda ltd
43) Weygandt, Jerry J., Paul D. Kimmel, and Donald E. Kieso. Financial Accounting: IFRS Edition. 4th ed., Wiley, 2019.
44) Horngren, Charles T., Gary L. Sundem, and John A. Elliott. Introduction to Financial Accounting. 10th ed., Pearson, 2013.
45) Jensen, Michael C., and William H. Meckling. “Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.” Journal of Financial Economics, vol. 3, no. 4, 2010, pp. 305-360.
46) Scott, William R. Financial Accounting Theory. Pearson Education Canada, 2012.
47) Stirilita, F.A., & Andayani. (2021). The Effect of Implementing Government Accounting
48) Standards and Good Governance on the Quality of Financial Reports. Journal of Accounting Science and Research, 10(11), 1-16.
49) http://jurnalmahasiswa.stiesia.ac.id/index.php/jira/article/view/4363.
50) Nwogugu, E. I.( 2021). “Investor Perceptions of Financial Statement Quality in Nigeria’s Capital Market Post-IFRS Adoption.” Journal of Accounting and Finance, 21(3), , pp. 45-67.
