Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms

In this study, we examine the effect of IFRS adoption on the earnings value relevance of quoted Nigerian firms. Using a sample of 101 firms (1212 firms-year observation) that are quoted on or before 2006, and have adopted IFRS from 2006 to 2017, we can investigate earnings value relevance. As the pr...

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Autores principales:	Ndubuisi Odoemelam, Regina G. Okafor, N. Grace Ofoegbu
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2019
Materias:	earnings value relevance ifrs ngaap nigeria fixed effect model Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/cdc12521d540430487b72692e625b30f
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spelling	oai:doaj.org-article:cdc12521d540430487b72692e625b30f2021-12-02T16:07:28ZEffect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms2331-197510.1080/23311975.2019.1643520https://doaj.org/article/cdc12521d540430487b72692e625b30f2019-01-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2019.1643520https://doaj.org/toc/2331-1975In this study, we examine the effect of IFRS adoption on the earnings value relevance of quoted Nigerian firms. Using a sample of 101 firms (1212 firms-year observation) that are quoted on or before 2006, and have adopted IFRS from 2006 to 2017, we can investigate earnings value relevance. As the principal objective of the inquiry, we introduce a cross-product term, equal to the product of earnings per share (EPS) and IFRS dummy variable, into the basic Ohlson model. The paper uses the Fixed Effect Model as the appropriate estimator for analysis of the data. The estimated coefficient on the cross-product term is statistically significant and positive. The results suggest that the adoption of IFRS in Nigeria leads to higher earnings value relevance. IFRS, as a principle-based, allows managers to use their discretion in the specific treatment of financial items. In doing so, they may bias earnings. Further, the results revealed that estimated coefficient of the cross product of book value and IFRS dummy variable is statistically insignificant and negative. Surprisingly, the simultaneous addition of earnings, the book value of equity, and firm-specific variables in a modified basic Ohlson model show enhanced earning incremental value relevance, while other variables were insignificant, except the interaction of earnings and audit firm size. Overall, results suggest that earnings under IFRS are valued relevance about economic growth conditions, with the nature of such relevance explaining variations on the share price. The findings of this study are utmost important to economic policymakers, investors, and Standard Setters.Ndubuisi OdoemelamRegina G. OkaforN. Grace OfoegbuTaylor & Francis Grouparticleearningsvalue relevanceifrsngaapnigeriafixed effect modelBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 6, Iss 1 (2019)
institution	DOAJ
collection	DOAJ
language	EN
topic	earnings value relevance ifrs ngaap nigeria fixed effect model Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	earnings value relevance ifrs ngaap nigeria fixed effect model Business HF5001-6182 Management. Industrial management HD28-70 Ndubuisi Odoemelam Regina G. Okafor N. Grace Ofoegbu Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms
description	In this study, we examine the effect of IFRS adoption on the earnings value relevance of quoted Nigerian firms. Using a sample of 101 firms (1212 firms-year observation) that are quoted on or before 2006, and have adopted IFRS from 2006 to 2017, we can investigate earnings value relevance. As the principal objective of the inquiry, we introduce a cross-product term, equal to the product of earnings per share (EPS) and IFRS dummy variable, into the basic Ohlson model. The paper uses the Fixed Effect Model as the appropriate estimator for analysis of the data. The estimated coefficient on the cross-product term is statistically significant and positive. The results suggest that the adoption of IFRS in Nigeria leads to higher earnings value relevance. IFRS, as a principle-based, allows managers to use their discretion in the specific treatment of financial items. In doing so, they may bias earnings. Further, the results revealed that estimated coefficient of the cross product of book value and IFRS dummy variable is statistically insignificant and negative. Surprisingly, the simultaneous addition of earnings, the book value of equity, and firm-specific variables in a modified basic Ohlson model show enhanced earning incremental value relevance, while other variables were insignificant, except the interaction of earnings and audit firm size. Overall, results suggest that earnings under IFRS are valued relevance about economic growth conditions, with the nature of such relevance explaining variations on the share price. The findings of this study are utmost important to economic policymakers, investors, and Standard Setters.
format	article
author	Ndubuisi Odoemelam Regina G. Okafor N. Grace Ofoegbu
author_facet	Ndubuisi Odoemelam Regina G. Okafor N. Grace Ofoegbu
author_sort	Ndubuisi Odoemelam
title	Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms
title_short	Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms
title_full	Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms
title_fullStr	Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms
title_full_unstemmed	Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms
title_sort	effect of international financial reporting standard (ifrs) adoption on earnings value relevance of quoted nigerian firms
publisher	Taylor & Francis Group
publishDate	2019
url	https://doaj.org/article/cdc12521d540430487b72692e625b30f
work_keys_str_mv	AT ndubuisiodoemelam effectofinternationalfinancialreportingstandardifrsadoptiononearningsvaluerelevanceofquotednigerianfirms AT reginagokafor effectofinternationalfinancialreportingstandardifrsadoptiononearningsvaluerelevanceofquotednigerianfirms AT ngraceofoegbu effectofinternationalfinancialreportingstandardifrsadoptiononearningsvaluerelevanceofquotednigerianfirms
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Effect of international financial reporting standard (IFRS) adoption on earnings value relevance of quoted Nigerian firms

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