EFFECTS OF IFRS ADOPTION ON EARNING VARIABILITY OF SELECTED DEPOSIT MONEY BANKS IN NIGERIA: A CO-INTEGRATION ANALYSIS APPROACH

Ifeoma Patricia Osamor (), Matthew Adeolu Abata and Chinyere Clareth Elluh
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Ifeoma Patricia Osamor: Lagos State University, Lagos, Nigeria
Matthew Adeolu Abata: Lagos State University, Lagos, Nigeria
Chinyere Clareth Elluh: Lagos State University, Lagos, Nigeria

European Journal of Accounting, Finance & Business, 2020, vol. 13, issue 23, 80-87

Abstract: The quality of financial reports made available to users of financial statements affects their behavior towards investment and economic activities, thereby affects the economy of the nation. The study therefore examined IFRS adoption and earnings variability of listed deposit money banks in Nigeria. The study adopted ex-post factor research design using secondary data which were sourced from the annual reports of ten banks from 2006 to 2018. Data spanned Seven (7) years before IFRS adoption (2006 – 2012) and seven years after IFRS adoption (2012 – 2018). Descriptive statistics, unit root test, co-integration test and regression were employed to analyze the data. The Fully Modified OLS (FMOLS) results showed R2 of 0.672652, while Dynamic OLS (DOLS) estimates R2 of 0.740295 which implied that 67% and 74% variations in Earnings were explained by the variation in Size, Profit, IFRS and the interacting variable respectively. FMOLS and DOLS estimations revealed that IFRS post-adoption has significant effect on earning variability. The study concludes that IFRS adoption significantly impacted on the quality of financial report. Therefore, the study recommended that banking firms should explore the benefits and provisions of IFRS to improve on their financial reporting practices.

Date: 2020
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