EFFECT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRSS) ADOPTION ON ACCOUNTING QUALITY OF LISTED COMPANIES IN NIGERIA

EFFECT OF INTERNATIONAL
FINANCIAL REPORTING
STANDARDS (IFRSS) ADOPTION
ON ACCOUNTING QUALITY OF
LISTED COMPANIES IN NIGERIA
Ogechi Eberechi Alpheaus,
Department of Accounting,
College of Management Sciences,
Michael Okpara University of Agriculture,
Umudike
Alpheausogechieberechi@gmail.com
ABSTRACT
The purpose of this paper is to ascertain the
effect of IFRS adoption on accounting quality
of firms listed on the Nigerian Stock Exchange.
The study adopted a value relevance
perspective to accounting quality by assessing
the accounting quality of earnings and equity
measured under NGAAP and IFRS reporting
regimes. Data for Market Value per share
(MVPS), Net Income per share (NIPS) and Book
Value of equity per share (BVPS) were
extracted from the financial statements of 21
listed entities for the pre and first years of IFRS
adoption and the Price Level regression model
used in comparing the relative value relevance
under the two alternative accounting rules.
Also, data were computed for Annual Stock
Returns (ASR), BVPS, NIPS, Changes in book
Value of equities (BVCH) and Changes in Net
Income per share (NICH) for a period of seven
years (2012 to 2018) and ASR regression
model was used as a robustness test to assess
the sustainability of accounting quality under
the period IFRS adoption by the entities.
Results of the Price level model indicate that
NIPS and BVPS have significant effect on
MVPS, jointly explaining 89.5% of the changes
in Market value of equities under IFRS as
against 80% reported under NGAAP with only
NIPS having significant effect. The coefficients
and t-values of BVCH and NICH under the
second model indicate that changes in both
earnings per share and book value of equity
Accounting and Finance Research Association
per share had significant positive effects on
annual stock returns over the period of IFRS
adoption. Based on the results, the paper
concludes that IFRS adoption has sustainable
significant positive effect on accounting
quality of listed companies in Nigeria, and
therefore recommends that managers of listed
entities should comply with IFRSs in other to
increase the quality and value of their earnings
and equities with associated positive tradeoffs
for local and foreign capital inflows.
Keywords: IFRS adoption, value relevance,
accounting quality, annual stock
returns, book value of equity,
earnings quality

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