International Financial Reporting Standards (IFRS) and Financial Performance of Multinational Companies in Nigeria
Keywords:
International Financial Reporting Standards (IFRS); Financial Performance; Disclosures; Multinational CompaniesAbstract
This study examined the relationship between International Financial Reporting Quality and the
financial performance in the context of listed multinational companies in the Nigerian Stock Exchange (NSE)
with the use of cross-sectional, time-series data, and OLS regression techniques. Also, some control variables
were introduced in order to reduce omitted variable bias. Nine (9) multinational companies were concentrated
upon between the period of 2012 and 2020 (9 years). The finding in this paper indicates that the extent of
corporate disclosure is significantly associated with financial performance because it showed a positive
correlation and significant result. The study concludes that, the more company complies with IFRS disclosure
guidelines, the more the investors are attracted to investing in such company and thereby improving their
financial performances (return on capital employed). The study recommended that among other things,
companies should also be concerned with the disclosure of relevant information at a possible minimal cost to
stabilize the possible positive effect of mandatory and voluntary disclosure of financial performance.
References
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Accounting and Business Research: International Accounting policy forum. Nigeria: Kay publishers Ltd.
Adebiyi, A. (2006). Institutional or legal framework of financial reporting. The European Journal of Economics and Finance,
221(8), pp. 22-34.
Adekoya, O. (2011). Similarities and differences, IFRS and Nigeria GAAP. Lagos: Price Water House Coopers International
Limited (PNCIL).
Ahmed, A. (2011). Practical challenges of HRS implementation: What bank regulators need to know. IFRS International
Conference Nigeria.
Ashbaugh, H. (2001). Non-US firms’ accounting standard choices. Journal of Accounting and Public Policy, 20 (2), pp. 129–
153.
Asiedu, E. (2006). Foreign direct investment in Africa: The role of natural resources, market size, government policy,
institutions and political instability. The World Economy, 29(1), pp. 63-77.
Asiedu, E. & Lien, D. (2011). Democracy, foreign direct investment and natural resources. Journal of International
Economics, pp. 84, 99-111.
Asika, N. (2009). Research methodology in behavioural science. Longman Nigeria PLC.
Azobu, M. (2010). Adoption of IFRS in developing countries. International Journal of Business and Management, 7(3), pp.
155-157.
Ball, R. (2006). International financial reporting standards (IFRS) pros and cons for investors. Accounting and Business
Research: International Accounting policy forum.
Barako, D.G.; Hancock, P. & Izan, H.Y. (2006). Factors influencing voluntary corporate disclosure by Kenyan companies.
Corporate Governance, 14(2), pp. 107–125.
Barry, J.E. (2002). The economic effect of IFRS adoption. The CPA Journal.
Barth, M.; Landsman, W.R. & Lang, M. (2008). International Accounting Standards and accounting quality. Journal of
Accounting Research, 46(9), pp. 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), pp. 95–119.
Bozzolan, S.; Trombetta, M. & Beretta, S. (2009). Forwardlooking disclosures, financial verifiability, and analysts’ forecasts:
A study of cross-listed European firms. European Accountability Reviews, 18, pp. 435–473.
Cai, F. & Wong, H. (2007). The Effects of IFRS adoption on global capital market integration. International Business and
Economics Research Journal, 7(8), pp. 25-34.
Celik, O.; Ecer, A. & Karabacak, H. (2006). Impact of firm specific characteristics on the web-based business reporting:
Evidence from the companies listed in turkey1. Problems and Perspectives in Management, 4(3), pp. 100–133.
Committee on Roadmap (2010). Report on the Adopting Of (IFRS) In Nigeria.
Covrig, V.; DeFond, M. & Hung, M. (2007). Home bias, foreign mutual fund holdings, and the voluntary adoption of
International Accounting Standards. Journal of Accounting Research, 45(8), pp. 41–70.
Cuijipers, R. &Buijink, W. (2005) Voluntary adoption of non-local GAAP in the european union: A study of determinants
and consequences. European Accounting Review, 14(3), pp. 487-524.
Daske, H. & Gebhardt, G. (2006). International financial reporting standards and experts’ perceptions of disclosure quality.
Abacus, 42(3–4), pp. 461–498.
Dirk, W. (2006). Foreign direct investment and development: An historical perspective. overseas development institute.
Background Paper for World Economic and Social Survey, Available at www.odi.org.uk/resources/docs/850.pdf.
Efobi, U.; Nnadi, M. Odebiyi, J. & Beecroft, I. (2014). Do the Rules Attract the Money? Implication of IFRS Adoption on
Foreign Direct Investment. Available at www.ssrn.com/abstract=2460967.
Ernst & Young (2009). Australia switch to international financial reporting standards: A perspective from accounting and
finance. Accounting and Finance Journal, 46(5), pp. 629-652.
Gassen, J. & Sellhorn, T. (2006). Applying IFRS in Germany: Determinants and consequences. Social Science Research
Network, 58(4), pp. 1-38.
Gordon, L.A.; Loeb, M.P. & Zhu, W. (2012). The impact of IFRS adoption on foreign direct investment. Journal of Account
& Public Policy, 31(6), pp. 374-398.
Hardigan, P.C.; Lai, L.L. & Carvajal, M.J. (2001). The influence of positive and negative affectivity on reported job
satisfaction among practicing pharmacists. Journal of Pharmaceutical Marketing & Management, 13(4), pp. 57-71.
Holger, D. & Gunther, G. (2006). The quality of financial statement. International Business and Economics Journal, pp. 30-
31.
Iatridis, G. (2008). Accounting disclosure and firms’ financial attributes: Evidence from the UK stock market. International
Review of Financial Analysis, 17(2), pp. 219–241.
Iatridis, G.E. (2012). Voluntary IFRS disclosures: Evidence from the transition from UK GAAPto IFRS. Managerial
Auditing Journal, 27(6), pp. 573–597.
ICAN Pack (2008). Financial Accounting. Nigeria: VI Publishing Limited.
ICAN (2006). Statement of Basic Accounting Standard. Nigeria: VI Publication Limited.
Ismaila, M.Z. (2010). IFRS as a tool for cross border financial reporting: International financial reporting standards.
Nigeria: Hazi publishers.
Iyoha, F. & Jimoh, J. (2011). Institutional infrastructure and the adoption of international financial reporting standard (IFRS)
in Nigeria. School of doctorial studies (European union) Journal, 18.
Jacob & Madu (2009). IFRS as a tool to promote cross-border investment.
Kline, R.B. (1998). Principles and practice of structural equation modeling. New York: Guilford Press.
Leuz &Verrecchiia (2000). IFRS promotes cross border investment. European journal, 20.
Ofoegbu, G.N. & Odoemelam, N. (2018). International financial reporting standards (IFRS) disclosure and performance of
Nigeria listed companies. Cogent Business & Management, 5(1), pp. 1-18.
Osuagwu, L. (2002). Business research methods: Principles and practice. Lagos: Grey Resource Limited.
PwC. (2013). Investor View. Retrieved from www.pwc. com/ifrs/investorsview.
Marfo, Y.E., & Atsunyo, W. (2014). Compliance with international financial reporting standards by listed companies in
Ghana. International Journal of Business and Management, 9(10), 87.
Mike, M. (2009). Seminar Understanding IFRS. National GAAP VS IFRS Lagos, Nigeria.
Murphy, A.B. (2000). The impact of adopting international accounting standards on the harmonization of accounting
practices. The International Journal of Accounting, 35(5), 471- 493.
Okere, E. O. (2009). International financial reporting and accounting issues: Imperative of attainment of economic
development in Nigeria. ICAN 39 Annual Accountant Conference.
Osuagwu, L. (2006). Business research methodology. Lagos: Grey Resources Ltd.
Oyedele, T. (2011). An overview of IFRS and challenges posed to professionals. A paper presented at a seminar on IFRS
Adoption in Nigeria. The Chartered Institute of Taxation in Nigeria.
Oyekanmi (2003). Institutional framework in accounting. Nigeria: Greg publisher’s ltd.
Rusnak (2009). The impact of IFRS on the performance and position of companies.
Spiceland, Sepe, and Tomassin (2001). The relevance and comparability of IFRS. European Journal of Economics, 4(2), 110.
Tatiana, P.T., Georgakopoulos, G., Sotiropoulos, I. &Vasileiou, K.Z. (2013). Mandatory disclosure and its impact on the
company value. International Business Research, 6(5), 1–16
Uwadiae, O. (2010). Legal and regulatory framework of accounting and financial reporting, the Nigeria accounting. The
Official Journal of the Institute of Chartered Accountant of Nigeria.
T. Provo, eds. Advances in consumer researh Volum 20. pp. 502-506. Association of consumer Research.
Accounting and Business Research: International Accounting policy forum. Nigeria: Kay publishers Ltd.
Adebiyi, A. (2006). Institutional or legal framework of financial reporting. The European Journal of Economics and Finance,
221(8), pp. 22-34.
Adekoya, O. (2011). Similarities and differences, IFRS and Nigeria GAAP. Lagos: Price Water House Coopers International
Limited (PNCIL).
Ahmed, A. (2011). Practical challenges of HRS implementation: What bank regulators need to know. IFRS International
Conference Nigeria.
Ashbaugh, H. (2001). Non-US firms’ accounting standard choices. Journal of Accounting and Public Policy, 20 (2), pp. 129–
153.
Asiedu, E. (2006). Foreign direct investment in Africa: The role of natural resources, market size, government policy,
institutions and political instability. The World Economy, 29(1), pp. 63-77.
Asiedu, E. & Lien, D. (2011). Democracy, foreign direct investment and natural resources. Journal of International
Economics, pp. 84, 99-111.
Asika, N. (2009). Research methodology in behavioural science. Longman Nigeria PLC.
Azobu, M. (2010). Adoption of IFRS in developing countries. International Journal of Business and Management, 7(3), pp.
155-157.
Ball, R. (2006). International financial reporting standards (IFRS) pros and cons for investors. Accounting and Business
Research: International Accounting policy forum.
Barako, D.G.; Hancock, P. & Izan, H.Y. (2006). Factors influencing voluntary corporate disclosure by Kenyan companies.
Corporate Governance, 14(2), pp. 107–125.
Barry, J.E. (2002). The economic effect of IFRS adoption. The CPA Journal.
Barth, M.; Landsman, W.R. & Lang, M. (2008). International Accounting Standards and accounting quality. Journal of
Accounting Research, 46(9), pp. 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), pp. 95–119.
Bozzolan, S.; Trombetta, M. & Beretta, S. (2009). Forwardlooking disclosures, financial verifiability, and analysts’ forecasts:
A study of cross-listed European firms. European Accountability Reviews, 18, pp. 435–473.
Cai, F. & Wong, H. (2007). The Effects of IFRS adoption on global capital market integration. International Business and
Economics Research Journal, 7(8), pp. 25-34.
Celik, O.; Ecer, A. & Karabacak, H. (2006). Impact of firm specific characteristics on the web-based business reporting:
Evidence from the companies listed in turkey1. Problems and Perspectives in Management, 4(3), pp. 100–133.
Committee on Roadmap (2010). Report on the Adopting Of (IFRS) In Nigeria.
Covrig, V.; DeFond, M. & Hung, M. (2007). Home bias, foreign mutual fund holdings, and the voluntary adoption of
International Accounting Standards. Journal of Accounting Research, 45(8), pp. 41–70.
Cuijipers, R. &Buijink, W. (2005) Voluntary adoption of non-local GAAP in the european union: A study of determinants
and consequences. European Accounting Review, 14(3), pp. 487-524.
Daske, H. & Gebhardt, G. (2006). International financial reporting standards and experts’ perceptions of disclosure quality.
Abacus, 42(3–4), pp. 461–498.
Dirk, W. (2006). Foreign direct investment and development: An historical perspective. overseas development institute.
Background Paper for World Economic and Social Survey, Available at www.odi.org.uk/resources/docs/850.pdf.
Efobi, U.; Nnadi, M. Odebiyi, J. & Beecroft, I. (2014). Do the Rules Attract the Money? Implication of IFRS Adoption on
Foreign Direct Investment. Available at www.ssrn.com/abstract=2460967.
Ernst & Young (2009). Australia switch to international financial reporting standards: A perspective from accounting and
finance. Accounting and Finance Journal, 46(5), pp. 629-652.
Gassen, J. & Sellhorn, T. (2006). Applying IFRS in Germany: Determinants and consequences. Social Science Research
Network, 58(4), pp. 1-38.
Gordon, L.A.; Loeb, M.P. & Zhu, W. (2012). The impact of IFRS adoption on foreign direct investment. Journal of Account
& Public Policy, 31(6), pp. 374-398.
Hardigan, P.C.; Lai, L.L. & Carvajal, M.J. (2001). The influence of positive and negative affectivity on reported job
satisfaction among practicing pharmacists. Journal of Pharmaceutical Marketing & Management, 13(4), pp. 57-71.
Holger, D. & Gunther, G. (2006). The quality of financial statement. International Business and Economics Journal, pp. 30-
31.
Iatridis, G. (2008). Accounting disclosure and firms’ financial attributes: Evidence from the UK stock market. International
Review of Financial Analysis, 17(2), pp. 219–241.
Iatridis, G.E. (2012). Voluntary IFRS disclosures: Evidence from the transition from UK GAAPto IFRS. Managerial
Auditing Journal, 27(6), pp. 573–597.
ICAN Pack (2008). Financial Accounting. Nigeria: VI Publishing Limited.
ICAN (2006). Statement of Basic Accounting Standard. Nigeria: VI Publication Limited.
Ismaila, M.Z. (2010). IFRS as a tool for cross border financial reporting: International financial reporting standards.
Nigeria: Hazi publishers.
Iyoha, F. & Jimoh, J. (2011). Institutional infrastructure and the adoption of international financial reporting standard (IFRS)
in Nigeria. School of doctorial studies (European union) Journal, 18.
Jacob & Madu (2009). IFRS as a tool to promote cross-border investment.
Kline, R.B. (1998). Principles and practice of structural equation modeling. New York: Guilford Press.
Leuz &Verrecchiia (2000). IFRS promotes cross border investment. European journal, 20.
Ofoegbu, G.N. & Odoemelam, N. (2018). International financial reporting standards (IFRS) disclosure and performance of
Nigeria listed companies. Cogent Business & Management, 5(1), pp. 1-18.
Osuagwu, L. (2002). Business research methods: Principles and practice. Lagos: Grey Resource Limited.
PwC. (2013). Investor View. Retrieved from www.pwc. com/ifrs/investorsview.
Marfo, Y.E., & Atsunyo, W. (2014). Compliance with international financial reporting standards by listed companies in
Ghana. International Journal of Business and Management, 9(10), 87.
Mike, M. (2009). Seminar Understanding IFRS. National GAAP VS IFRS Lagos, Nigeria.
Murphy, A.B. (2000). The impact of adopting international accounting standards on the harmonization of accounting
practices. The International Journal of Accounting, 35(5), 471- 493.
Okere, E. O. (2009). International financial reporting and accounting issues: Imperative of attainment of economic
development in Nigeria. ICAN 39 Annual Accountant Conference.
Osuagwu, L. (2006). Business research methodology. Lagos: Grey Resources Ltd.
Oyedele, T. (2011). An overview of IFRS and challenges posed to professionals. A paper presented at a seminar on IFRS
Adoption in Nigeria. The Chartered Institute of Taxation in Nigeria.
Oyekanmi (2003). Institutional framework in accounting. Nigeria: Greg publisher’s ltd.
Rusnak (2009). The impact of IFRS on the performance and position of companies.
Spiceland, Sepe, and Tomassin (2001). The relevance and comparability of IFRS. European Journal of Economics, 4(2), 110.
Tatiana, P.T., Georgakopoulos, G., Sotiropoulos, I. &Vasileiou, K.Z. (2013). Mandatory disclosure and its impact on the
company value. International Business Research, 6(5), 1–16
Uwadiae, O. (2010). Legal and regulatory framework of accounting and financial reporting, the Nigeria accounting. The
Official Journal of the Institute of Chartered Accountant of Nigeria.
T. Provo, eds. Advances in consumer researh Volum 20. pp. 502-506. Association of consumer Research.
Published
2021-09-22
How to Cite
Osho, A., Olutayo, . M. E., & Olayinka, E.-A. (2021). International Financial Reporting Standards (IFRS) and Financial Performance of Multinational Companies in Nigeria: Array. The Journal of Accounting and Management, 11(2). Retrieved from https://dj.univ-danubius.ro/index.php/JAM/article/view/1351
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