The Value Relevance of Accounting Disclosures among Nigerian Financial Institutions after the IFRS Adoption

Abstract

This paper discusses about the adoption of International Financial Reporting Standards (IFRS) by the Nigerian financial institutions. Nigeria have been using domestic accounting standard (NGAAP) for banks and non-banks financial institutions known as Statement of Accounting Standards (SAS 10 Part 1 and SAS 15 Part 2) issued in 1990 and 1997 respectively for financial reporting. These domestic standards were adopted from International Accounting Standards (IAS 30) but have not been updated like IAS 30 as reported by the Report on Observance of Standard Codes (ROSC) of Nigeria in 2004 and 2011. The change in accounting regulations is as a result of the weaknesses of NGAAP and low disclosure requirements. IFRS reporting has more disclosures than NGAAP especially for financial institutions. Under NGAAP financial instruments have not been classified as in IFRS. For instance, financial instruments have been classified into four under IAS 39 as; (i) recognised fair value on gain or loss in profit or loss, (ii) are measured at amortised cost for investments held-to-maturity, (iii) measured at amortised cost for loans and receivables, (iv) measured at fair value gain or loss for available-for-sale financial assets recognised in other comprehensive income. Additionally, financial liabilities have been categories into two namely; (i) measured at amortised fair value on financial liabilities through profit or loss and, (ii) measured at amortised other liabilities. Now with the mandatory adoptions of reporting under IFRS by all listed financial institutions, will the accounting disclosures be more value relevant among Nigerian financial institutions?

Quality of Accounting Reporting After the IFRS Adoption in Nigeria

“…Despite the relevance of IFRS adoption in Nigeria there were few value relevance studies have been conducted in Nigeria (e.g., (Titilayo, 2011;Abiodun, 2012;Umoren and Enang, 2015;Mohammed and Lode, 2015a;2015b)). …”

Islamic accounting reporting and economic development: Nigerian perspective

“…The adoption of IFRS in Nigeria is as a result of global pressures from investors and international community fo the harmonisation of financial reporting (Mohammed & Lode, 2015). Firms that have been issuing Islamic financial products are complying with the both IFRS and AAOIFI in Nigeria.…”

Book value, earnings, dividends, and audit quality on the value relevance of accounting information among Nigerian listed firms

“…These studies apart from Mohammed and Lode (2016) did not consider the effect of firms' characteristics like size, leverage or audit big 4 for the value relevance studies. Also, the studies were conducted for either financial firms or non-financial firms, individually.…”

“…For example, Abdulsallam et al (2016), Abubakar et al (2017), Mohammed and Lode (2016), , Omokhudu and Ibadin (2015), Omokhudu and Ibadin (2015), Tanko (2012) and Umoren and Enang (2015) looked at the effect of IFRS on the value relevance of accounting information. However, the findings have been mixed and the methods have been varied.…”

“…Umoren and Enang (2015) studied earnings and book value. Mohammed and Lode (2016) investigated on assets and liabilities and Abdulsallam et al (2016) surveyed on net income and expenses.…”