Citation :

Matthew Olubayo Omotoso, Oladipo Oluwafolakemi Fasesin, Yusuff S, Pham Thi Quyen, 2024. "Impact of IFRS on Financial Reporting Quality: Evidence from Non-Financial Companies in Nigerian Stock Exchange" ESP International Journal of Science, Humanities & Management Studies(ESP-IJSHMS)  Volume 2, Issue 4: 26-44.

Abstract :

The objective of this research is to investigate the impact of adopting International Financial Reporting Standards (IFRS) on the quality of financial reporting in non-financial companies listed on the Nigerian Stock Exchange (NSE). The study specifically focuses on examining earnings management through discretionary accruals before and after the implementation of IFRS. Data for this study was collected from the NSE Factbook and the official websites of selected non-financial firms. The analysis concentrates on data from non-financial entities listed between 2003 and 2020. The research compares the level of discretionary accruals in these firms before and after the adoption of IFRS to determine whether IFRS implementation influences earnings management practices. The study utilizes secondary data from 2003 to 2011 for the pre-adoption period and from 2012 to 2020 for the post-IFRS adoption period for comparison.A dynamic panel data regression model utilizing the generalized method of moments (GMM) was employed for statistical analysis to investigate the relationship between IFRS adoption and discretionary accruals. The results indicated that there was a notable increase in discretionary accruals following the implementation of IFRS. This increase was highlighted by the highly significant coefficient observed between IFRS adoption and discretionary accruals in the models utilized for the statistical analysis. Moreover, it was observed that certain non-financial sector industries within the NSE displayed a positive association with discretionary accruals subsequent to the adoption of IFRS. This suggests that the impact of IFRS adoption on discretionary accruals is not uniform across all sectors, with some industries experiencing a more pronounced effect than others. The results of this research shed light on how the adoption of IFRS affects discretionary accruals in non-financial companies listed on the NSE. By comparing financial reporting quality before and after IFRS implementation, the findings indicate thatIFRS promotes earnings management practices through discretionary accruals.

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Keywords :

Earnings Management, IFRS, Discretionary Accruals, GMM, NSE, Non-Financial Entities.