Firm Characteristics and Compliance with International Financial Reporting Standards (IFRS) by Listed Financial Services Companies in Nigeria

Abstract

This study investigated the level of compliance with International Financial Reporting Standards (IFRS) by listed financial services companies in Nigeria, and the effect firm characteristics have on the level of compliance. The study also examined whether compliance with IFRS significantly differs between listed Deposit Money Banks (DMB) and Insurance Companies (INC) in Nigeria. Secondary data used for the study were extracted from the annual report and accounts of the sampled firms and analyzed using the multiple regression technique and Wilcoxon Rank Sum Test for two independent samples. The study found that (i) the level of compliance with IFRS by the sampled firms is high (about 85.9%); (ii) profitability is positive and significantly associated with IFRS at 10% level; (iii) firm size and auditor type are positive but insignificantly associated with IFRS compliance; and (iv) leverage and internationality are negative and insignificantly associated with IFRS compliance. Furthermore, the study found that compliance with IFRS by DMB is higher than INC but the difference is not statistically significant. The major conclusion reached in this study was that compliance with IFRS by listed financial services companies in Nigeria is not driven by firm attributes. The study recommended that adequate steps be taken by regulatory authorities such as the Financial Reporting Council (FRC) of Nigeria to ensure full compliance with the mandatory disclosure requirements of IFRS by listed firms in Nigeria.

Compliance with IFRS 16 Mandatory Presentation and Disclosure Requirements and Company Characteristics: Evidence from an Emerging Market

“…Also, the results are consistent with mainstream of literature on this regard. As many studies reported similar association between company size and level of compliance of IFRSs MDR (Juhmani, 2012;Kumar & Saini, 2016;Samaha & Stapleton, 2009;Sarea & Abdulla, 2015;Tsegba et al, 2017). So, this study confirmed the prior studies in compliance research.…”

“…In the developing countries, Tsegba et al (2017) studied the compliance level with IFRS and its impact of the company characteristics as applied to financial companies listed in Nigeria stock market. The results showed that in average the level of compliance around 86% and profitability has positive significant association at 10% while the size of company and the auditor size are positively associated but not significant.…”

“…Studies on the association between the compliance level with MPDR and the company size show mixed results with majority in the line of positive association. Numerous studies provide evidence that the company size has positive association with the level of compliance (Akhtaruddin, 2005;Al-Shammari et al, 2008;Alsaeed, 2006;Dumontier & Raffournier, 1998;Juhmani, 2012;Kumar & Saini, 2016;Samaha & Stapleton, 2009;Sarea & Abdulla, 2015;Tsegba et al, 2017). Few studies showed no relationship between level of compliance and MDR (Glaum et al, 2013;Hassan et al, 2019).…”

“…Regarding the association between the compliance level with IFRS and company profitability, the accounting literature provide mixed results and inconsistent findings. Some researchers reported significant positive association (Akhtaruddin, 2005;Al-Shammari, 2011;Al Mutawaa & Hewaidy, 2010;Hassan et al, 2019;Tsegba et al, 2017). On the other hand, some researchers found that profitability is not significantly linked compliance with IFRS.…”

“…The value of adjusted R 2 in the model is 40.2% which ranked this model as powerful one comparing to the similar studies. The accounting literature in this field of research reported varied results for the adjusted R 2 , for intense, Tsegba et al (2017) reported adjusted R 2 of 23% while Tawiah and Boolaky (2019) reported R 2 of 20.25% which adjusted R 2 will be less.…”