IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 3 NO. 2 2017

---

A Comparative Analysis of the Effect of IFRS Adoption on Value Relevance of Accounting Information in an Emerging Economy: A Focus on Listed Deposit Money Banks in Nigeria

Pavtar, Augustine Agir

---

Abstract

This study investigates the effect of IFRS adoption on value relevance of accounting information of listed Deposit Money Banks in Nigeria. The study adopts the ex-post facto research design. Data used for the study was sourced from the annual published accounts of selected Deposit Money Banks under investigation from 2008– 2015. Descriptive statistics and regression analysis were used in analyzing the data. Findings from the analysis revealed that there is no significant impact of post IFRS earnings per share and book value per share on the share price of deposit money banks in Nigeria while post IFRS volume of shares issued significantly affect the share price of Deposit Money Banks in Nigeria. It was also found that value relevance of financial information of Pre and post IFRS adoption in Nigerian DMBs differs significantly. The study recommended that management, external auditors and regulators should work together to ensure total compliance by Nigerian DMBs in order to achieve IFRS objectives, since enforcement is a necessary tool for ensuring compliance

keywords:

IFRS Adoption; Value Relevance; Accounting Information; Emerging Economy; Globalization

---

References:

Agostino M., Drago D., Silipo D. B. (2011). The value relevance of IFRS in the European
banking industry. Review of Quantitative Finance and Accounting, 36 (3), 437–457.

Akerlof G. A. (1970). The market for “lemons”: Quality uncertainty and the market
mechanism. Quarterly Journal of Economics, 84(3):488–500.

Alali, F. A., & Foote, P. S. (2012). The Value Relevance of International Financial Reporting
Standards: Empirical Evidence in an Emerging Market. The International Journal of
Accounting, 47, 85-108.

Al-Deehani, T.M. (2005), Modeling Volatility Spillover in GCC Stock Markets using
Structural Time Series Analysis, Journal of Accounting and Finance, 4, 35-44.

Al-Deehani, T.M (2005).The determinants of stock prices in the Kuwait Stock Exchange; an
extreme bound analyses. Investment Management and Financial Innovation, 3, 16-24

Alfaraih, M., (2009). Compliance with International Financial Reporting Standard and Value
relevance of accounting information in emerging stock market: Evidence from Kuwait.
A thesis submitted in fulfilment of the requirement for degree of Doctor of Philosophy
to the school of accounting, University of Technology, Queensland.

Alfaraih, M., & Alanezi, F. (2011). The usefulness of earnings and book value for equity
valuation to Kuwait Stock Exchange participants. International Business and
Economics Research Journal, 10(1), 73-90.

Alistair, (2010).IFRS.Historical Background. In Essien-Akpan (Ed). IFRS: The Role of
Chartered Secretaries and Administrators. 35th Annual Conference of ICSAN.Lagos
Sheraton Hotels and Towers. October 26th and 27th.

Anandarajan, A., Hasan, I., Is?k, I.ve McCarthy, C. (2006) “The Role of Earnings and Book
Values in Pricing Stocks: Evidence from Turkey” Advances in International
Accounting, 19(1):59-99

Barth, M., Beaver, W. & Landsman, W. (2001). The relevance of the value relevance
literature for financial accounting standard setting: Another View. Journal of
Accounting & Economics, 31, 77-104.

Barth, M., Landsman, W.R. & Lang, M. (2008). International Accounting Standards and
accounting quality. Journal of Accounting Research 46, 467–498

Bartov, E., Goldberg, S. & Kim, M., (2005). Comparative value relevance among German,
U.S. and International Accounting Standards: a German stock market perspective.
Journal of Accounting, Auditing and Finance, 20 (2), 95–119.

Beisland L.A., 2009. A Review of the Value Relevance Literature, The Open Business
Journal, 2, 7-27.

Beisland, L.A. (2010). Is the value relevance of accounting information consistently?
Underestimated? Open Business Journal, 3,1-7.

Beuselinck, C. & Manigart, S. 2005. "Financial Reporting Quality in Private Equity Backed
Companies: The Impact of Ownership Concentration," Working Papers of Faculty of
Economics and Business Administration, Ghent University, Belgium 05/343, Ghent
University, Faculty of Economics and Business Administration.

Beyer, A., Cohen, D.A., Lys, T.Z. &.Walther, B.R. (2010) The financial reporting
environment: Review of the recent literature. Journal of Accounting and Economics
50: 296–343

Bhatt, p & Sumangala, J.K.(2012), Impact of Earnings per share on Market Value of an
equity share: An Empirical study in Indian Capital Market Journal of Finance,
Accounting and Management, 3(2), 1-14.

Botosan, C. & Plumlee, M. (2002). A Re-examination of Disclosure Level and the Expected
Cost of Equity Capital. Journal of Accounting Research, 40, 21-40.

Burgsthler D. & Dichev I. (1997). Earnings, Adaptation and Equity Values. The Accounting
Review, April: 187-125.

Bushman, R. M. & Smith., J.A., (2001). Financial accounting information and corporate
governance. Journal of Accounting and Economics. 32:237–333

Chalmers, K., Clinch, G., & Godfrey, J. M. (2011). Changes in value relevance of accounting
information upon IFRS adoption: Evidence from Australia. Australian Journal of
Management, 36(2), 151–173.

Chalmers, K., Clinch, G., Godfrey, J. M., & Wei, Z. (2012). Intangible assets, IFRS and
analysts' earnings forecasts. Accounting & Finance, 52(3), 691–721.

Chang, K.-L., Chen, N.-K., & Leung, C. K. Y. (2011). Monetary policy, term structure and
asset return: comparing REIT, housing and stock. The journal of real estate finance and
economics, 43(1), 221–257.

Clarkson, P., Hanna, J. D., Richardson, G. D., & Thompson, R. (2011). The impact of IFRS
adoption on the value relevance of book value and earnings. Journal of Contemporary
Accounting and Economics, 7, 1–17.

Collins, D, Maydew, E & Weiss, I (1997). Changes in the value relevance of earnings and
book value over the past forty years, Journal of Accounting and Economics. 24(1), 39-
67.

Dahmash, F.N & Qabajeh, M. (2012). Value relevance of Olhson model with Jordanian data.
Interdisciplinary Journal of Contemporary Research in Business, (3)11.

Dung N.V.(2010), Value-Relevance of Financial Statement Information: A Flexible
Application of Modern Theories to the Vietnamese Stock Market, Working paper
(Foreign Trade University)

Durbin, J. & Watson, G.S. (1951), Testing for serial correlation in least-squares regression,
II, Biometrika 38, 159-178.

Dye, R.A. & Sridhar, S.S. (2008), A positive theory of flexibility in accounting standards.
Journal of Accounting and Economics 46(2-3), 312-333

Eccles R. J., Hertz R. H., Keegan E. M., & Phillips D. M. H.(2001), The value reporting
revolution - Moving Beyond the earning games, John Wiley & Sons Inc., New York.

El-Gazzar, S., Finn, P. & Jacob, R. (1999). An Empirical Investigation of Multinational
Firms’ Compliance with International Accounting Standards. The International
Journal of Accounting, 34(2), 239-248.

Fasoranti, M.M., Adelakun, O.J. and Joshua, O.O. (2014). The Adoption of International
Financial Reporting Standards (IFRS) – Issues, Challenges and Opportunities.
Research Journal of Social Science & Management, 3(11).

Fowokan, T. (2011). IFRS Adoption in Nigeria: Tax implications. A paper presented at CITN
seminar on IFRS Adoption in Nigeria 4-10

Francis, J. & Schipper, K. (1999). Has Financial Statement Lost their Relevance? Journal of
Accounting Research, 37, 319-352.

Francis, J., LaFond, R., Olsson, P., & Schipper, K. (2004). Cost of capital and earnings
attributes. The International Journal of Accounting, 4(1), 232-248.

Galaen, A. & Stenhaim, T. (2010). Differences in accounting quality between Norwagian
GAAP and IFRS. A master thesis submitted to Buskend University College, spring,
Norway.

Gjerde, O., Knivsfla, K. H., & Saettan, F., (2008). The value relevance of adopting IFRS:
evidence from 145 NGAAP restatements.” Journal of International Accounting,
Auditing and Taxation 17 (2008): 92-112.

Healy, P. & Palepu, K. (2001). Information Asymmetry, Corporate Disclosure, and the
Capital Markets: A Review of the Empirical Disclosure Literature. Journal of
Accounting and Economics, 31, 405–440.

Himma, P. S. (2013), ‘The Effect of Earnings Management on the Value Relevance of
Earnings and Book Value of equity’ University Brawijaya [Online],
http://jimfeb.ub.ac.id/index.php/jimfeb/article/viewFile/280/228.

Holthausen, R.W. & Watts, R.L., (2001). The relevance of value relevance literature for
Financial Accounting Standards Setting, Journal of Accounting and Economics, 31:2-
75.

Hossain, M.; Tan, M.; Adams, M. B. (1994): Voluntary Disclosure in an Emerging Capital
Market: Some Empirical Evidenc from Companies Listed on the Kuala Lumpur Stock
Exchange. The International Journal of Accounting 29 (4), 334–351.

Ijeoma, N.B. (2015) Empirical Analysis on the Use of Forensic Accounting Techniques in
Curbing Creative Accounting. International Journal of Economics, Commerce and
Management. 3(1), 378-392

Jensen, M.C., and W.H. Meckling. (1976) "Theory of the Firm: Managerial Behavior,
Agency Costs, and Ownership Structure." Journal of Financial Economics 3: 305–60.

DOWNLOAD PDF

---

Back