IFRS ADOPTION AND ACCRUAL-BASED MANAGED EARNINGS IN NIGERIA
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Date
2022
Journal Title
Journal ISSN
Volume Title
Publisher
Asian Economic and Financial Review
Abstract
This study aims to evaluate the effects of the adoption of the International Financial
Reporting Standards (IFRS) on the accrual-based managed earnings behavior of firms
in Nigeria. The panel corrected standard errors (PCSE) multivariate method was
employed to analyze firm-level data for 125 firms and covers the 11 sectors on the
Nigerian Stock Exchange (NSE). The results of the Welch–Satterthwaite test show a
significant difference between the pre-adoption (2003–2011) and post adoption (2012–
2020) discretionary accruals. These variables conformed to the a priori expectation and
are all significant in the most parsimonious models. Contrary to some developed
countries, the data does not support the idea that leverage, growth, and book-to-market
value influence managed earnings for Nigeria. Managed earnings are not solely time-
driven but are explained by certain firm characteristics (IFRS adoption, post-adoption
firm-size, post-adoption audit firm’s size, returns on equity and asset turnover). Future
research could explore opportunities in the areas of limitation we identified.