Original Research Article | OPEN ACCESS

Earnings Predictability and Adoption of International Financial Reporting Standard in the Nigerian Deposit Money Banks

For correspondence:-    

Received: April 4, 2020        Accepted: June 19, 2020        Published: 26 June 2020

Citation: Earnings Predictability and Adoption of International Financial Reporting Standard in the Nigerian Deposit Money Banks. Account Tax Rev 2005; 4(2):57-74 doi:

© 2005 The authors.
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Abstract

The idea of International Financial Reporting Standards (IFRS) is to make financial information uniform, transparent and comparable in order to increase the quality of information and reduce discrepancies in international accounting principles and reporting practices. However, financial information quality in Nigeria remains weak compared to many advanced jurisdictions. This resulted in the hampering of the growth of efficient equity markets. Therefore, the study investigates the effect of earnings predictability on the IFRS adoption in the Nigerian deposit money banks. The population of the study was all the 14 listed Nigerian deposit money banks as at 31st December 2016 out of which ten banks were drawn as sample. The multivariate technique of data analysis was employed using a multiple regression model, structured using longitudinal balanced panel data. The findings of the study revealed that earnings under IFRS adoption predict and influences the share price of listed Nigerian deposit money banks than before adopting the IFRS. Based on the findings of the study, it is therefore recommended that regulatory agencies of the sector, especially Central Bank of Nigeria (CBN) should intensify effort of monitoring the adoption and compliance by all the banks and other financial institutions in the country, as this will go a long way in improving the quality of the reported earnings and level of patronage of investments of the listed deposit money banks in Nigeria.

Keywords: International Financial Reporting Standard (IFRS), Earnings, Change in Earnings and Book Value.