International Financial Reporting Standards Adoption and Financial Reporting Quality in Nigeria: A Comparative Analysis of Manufacturing and Banking Sectors

Mbazulike Uche Juliet, Oluwamayowa Olalekan Iredele, Semiu Babatunde Adeyemi

Abstract


Purpose: This study examines the impact of International Financial Reporting Standards (IFRS) adoption on financial reporting quality in Nigeria’s listed manufacturing and banking sectors, using discretionary accruals as a proxy for financial reporting quality.

Design/Methodology/Approach: Employing descriptive statistics and the Wilcoxon Signed Ranks Test on data from eleven listed firms per sector over an eight-year period pre-IFRS adoption (2008–2011) and post-IFRS adoption (2021–2024), the study compares financial reporting quality before and after IFRS implementation.

Findings:The analysis reveals divergent outcomes post IFRS adoption. In the manufacturing sector, discretionary accruals became significantly more negative and unpredictable, indicating increased earnings manipulation and a decline in reporting quality. Conversely, the banking sector showed no statistically significant change, reflecting stronger institutional enforcement and regulatory oversight.

Research Limitations/Implications: The study highlights the critical role of institutional capacity and enforcement mechanisms in determining the effectiveness of IFRS adoption, implying that adoption alone without robust governance may aggravate earnings management. The findings suggest policymakers and regulators should strengthen institutional enforcement to ensure IFRS adoption improves financial reporting quality.

Practical Implications: The findings suggest policymakers and regulators should strengthen in stitutional enforcement to ensure IFRS adoption improves financial reporting quality.

Originality/Value: This research uniquely compares the effects of IFRS adoption across two key sectors in Nigeria, underscoring how sector specific institutional factors influence financial reporting outcomes post adoption.

Keywords: International Financial Reporting Standards; Financial Reporting Quality; Discretionary Accruals; Adoption; Manufacturing Sector; Banking Sector.

DOI: https://doi.org/10.58869/EJABM12(1)/02


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References


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