INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) IMPLEMENTATION AND
EARNINGS RESPONSE COEFFICIENT (ERC) OF LISTED NIGERIAN COMPANIES

Sunny Biobele Beredugo 1 & John Uzoma Ihendinihu 2
Department of Accounting, College of Management Sciences,
Michael Okpara University of Agriculture, Umudike,
Abia State, Nigeria.
1 beredugosunny@gmail.com,
2 ihendinihu.john@gmail.com

ABSTRACT
This study examined the relationship between International Financial Reporting Standards (IFRS)
Implementation and Earnings Response Coefficient (ERC) of listed Nigerian companies. The study was
necessitated by the low usage of the equity market as a source of financing business in Nigeria which is
attributable to the unfavorable market response to earnings information that is exclusively dependent on IFRS exigencies as well as little or no information on earnings persistency, investors’ protection and
systematic risk. The study by extension assessed the interactive effects between IFRS and investors'
protection among others on the Earnings Response Coefficient of listed Nigerian companies. This study adopted the ex-post facto and content analysis research designs. This was conducted using 31 listed Nigerian companies covering a period of 2013 to 2017. The results of the cross sectional random effect model show that ERC is not positively associated with IFRS implementation. This is not inclusive of the fact that IFRS implementation brings about high quality standards which is a prerequisite for high quality information, but it is not sufficient enough to induce a change in the ERC. It was discovered that ERC improves with the mediating effect of a strong investors’ protection in an IFRS environment, while ERC was also inversely and significantly affected by the interactive effect between beta and IFRS implementation. It was therefore recommended that firms should improve on their investors' protection in order to promote a high earnings response coefficient under an IFRS environment among others.

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