International Financial Reporting Standards Adoption and Financial Reporting Information Overload: Evidence from Nigerian Banks

Abstract

The wide adoption and implementation of International Financial Reporting Standard (IFRS) principally hinges on the notion that it promotes the production of high quality financial information for investor's decision making in the current globalized world. However, IFRS adoption is stated to be associated with the problem of information overload. This paper examines this assertion within the Nigerian banking industry. Data is generated from the financial reports of thirteen banks quoted on the Nigerian Stock Exchange as at 31 st December, 2014, two years pre and post-IFRS adoption. Descriptive statistics is utilized to analyse the data and the paired sampled t-test statistics to test the hypotheses. The descriptive results reveal that on average, IFRS adoption cause a 31.6% increase in the length of financial reports with the accounting policies segment increasing by 95.3%, income statement by 84.6%, notes to the accounts by 70.2%, management discussion and analysis by 23.2%, cash flow statement by 13.3%, and statement of financial position by 9.7%. Only the others segments of the financial reports decrease by 10%. The results of the paired ttest shows that there is a significant difference in the overall length of information disclosed by Nigerian banks in the pre and post-IFRS adoption periods implying IFRS adoption led to information over load in the financial reports of Nigerian banks. Further investigation reveals that notwithstanding the increase in information disclosure, post-IFRS reporting is more decision relevant. The paper recommends that investors seeking investment opportunities in the post-IFRS regime should patronize financial analyst to guide their decision making and the regulatory authorities especially the Central Bank of Nigeria should discourage company directors from disclosing unnecessary information by regulating on the maximum number of pages in annual reports and accounts.

Board Gender Diversity and CSR Reporting: Evidence from Jordan

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