BY
ROSEMARY O. OBASI
Department of Accounting, Benson Idahosa University,
Benin, Edo State
MERCILINA C. EKWUEME
Department of Accounting, Nnamdi Azikiwe
University, Awka, Anambra State.
&
NKECHIYEM H. OSUYALI
Department of Accounting, Benson Idahosa University,
Benin, Edo State
ABSTRACT
The study
assessed the impact of IFRS accounting numbers on value relevance in quoted
companies in Nigeria. The objective of this study is to determine if the
adoption of lFRS has improved value relevance of quoted companies in Nigeria.
The researchers adopted the use of secondary data by way of annual reports of the
quoted companies in Nigeria. The Taro Yamani formula was used to derive the
sample size from the population of one hundred and eighty-three quoted
companies on the floor of the Nigerian Stock Exchange from which a sample size
of one hundred and twenty-six companies with error limit of five percent
appropriate for the study was adopted. We adopted the cross sectional and
longitudinal design and thus compared the pre-IFRS and post IFRS financial
statements for over a period of six years (2008-2013). In analyzing, the
regression analysis was used. Findings from the analysis showed that there is
no significant impact on the value relevance of IFRS financial statement. The
study therefore recommends that companies should ensure that reporting model is
amended to suit disclosures and reporting requirements of IFRS.
KEYWORDS:
Value relevance, IFRS Financial statement, Pre-IFRS, Post-IFRS,
Accounting numbers
INTRODUCTION
Information
emanating from financial reporting is regarded as useful when it faithfully
represents the “economic substance” of an organization in terms of relevance,
reliability, and comparability (Spiceland, Sepe & Tomassini, 2001). High
quality accounting information is essential for well functioning capital
markets and economy as a whole and as such should be of importance to
investors, companies and accounting standard setters (Hellstron, 2005).
Financial statements still remain the most important source of externally beneficial
information in companies; it serves as a mirror to the investor. Investors are
not in a position to directly access the performance of the company in which
they are intended to invest, they usually depend on the financial statements
prepared by the management of the company. Rational investors use those
financial reports and disclosures, among other publically available information
to assess the risk and the value of the firm. Accounting data, such as earnings
per share, is termed value relevant if it is significantly related to the
dependent variable, which may be expressed by price, return or abnormal return
(Gjerde, Knivsfla & Saettem, 2007). Nevertheless, financial statement is to
provide information about a company in order to make better decisions for users
particularly the investors (Germon and Meek, 2001). It should also increase the
knowledge of the users and give a decision maker the capacity to predict future
actions.
The
concept of value relevance has been defined as the ability of accounting
numbers to summarize the information underlying the stock prices, thus the
value relevance is indicated by a statistical association between financial
statement and prices or returns (Jianwei & Chunjiao, 2007) . Studies on
value relevance of accounting information are motivated by the fact that quoted
companies use financial statements as one of the major media of communication
with their equity shareholders and public at large (Vishnani & Shah,
2008). Value relevance is seen as proof
of the quality and usefulness of accounting numbers and as such, it can be
interpreted as the usefulness of accounting data for decision-making process of
investors and its existence is usually by a positive correlation between market
values and book values (Takacs, 2012).
This
study investigates the value relevance of IFRS financial statement in quoted
companies in Nigeria under the Nigerian stock exchange for over a period of 6
years in the pre and post financial periods of IFRS application from 2008 to
2013. Thus, the following questions drive the thrust of this study;
1. To what extent has the adoption of IFRS
improved value relevance in quoted companies in Nigeria?
2.
Is there a significant value
relevance variable in the pre and post IFRS financial statement?
The
central purpose of carrying out the research work is to capture the impact of
value relevance on IFRS financial statements in quoted companies in Nigeria. To
achieve this, the following strategic objectives are adopted:
1. To determine if the adoption of IFRS
has improved value relevance in quoted companies in Nigeria.
2. To identify the most significant value
relevance variable in pre and post IFRS financial statement.
The
research question gave rise to the following hypothesis;
1. H0: IFRS adoption has not
improved value relevance in quoted companies in Nigeria.
H1: IFRS
adoption has improved value relevance in quoted companies in Nigeria.
2. H0: There is no significant
value relevance variable in the pre and post IFRS financial statement.
H1:
There is a significant value relevance variable in the pre and post IFRS
financial statement.
Investors,
capital market analyst and speculators are always concerned about the value
relevance of financial statement especially in predicting the market value of
firms. Therefore a study of this nature that examines the value relevance of
accounting information will be immensely beneficial as it will help consolidate
or refute where necessary whatever perceptions that investors have about the
capital market.
2. THEORETICAL
FRAMEWORK
From past experience, it is known that
investors may temporarily pull financial price away from their long term trend
level. Over reactions may occur, so that excessive optimism (euphoria) may
drive prices unduly high or excessive pessimism may drive prices unduly low.
New theoretical and empirical arguments have been put forward against the
notion that financial markets are efficient. Market
efficiency depends on the ability of traders to devote time and resources to
gathering and disseminating information. Markets that are more efficient
attract more investors, which translate into increased market liquidity (Osei,
1998). Investors care about market efficiency because stock price movements
affect their wealth. More generally, stock market inefficiency may affect
consumption and investment spending and therefore influence the overall
performance of the economy (Adelegan, 2009). A market is efficient with respect
to publicly available information if it is impossible to make an economic
profit by trading on the basis of the information set (Jensen, 1978). The
efficiency tests, therefore, consist of measuring the ability of the market to
anticipate new information and the speed with which it adjusts to such data. The
efficient market hypothesis (EMH) has been the subject of consideration. Most
evidence in Nigeria, however, indicates that the Nigerian capital market is
efficient in the weak form efficient (Adelegan, 2004). The success or failure
of management decision can be evaluated only in the light of the impact of firm
stock prices (Remi, 2005). Moreover, Shiller (2000) supports that stock prices
are very much uncertain and this may not be true because firm’s fundamentals
may to a great extent influence stock prices. This argument is supported by
early rejection of a random walk theory by Porterba and Summer (2000) who argue
that there is little theoretical basis for strong attachment to the null
hypothesis that stock prices follow a random walk.
2.1 Related
Studies
2.1.1 Share Price and Return on Equity (ROE)
Shareholders are concerned about their
return on investment. Return on equity is the company's profit after tax
divided by the percentage rate of net assets. The indicators reflect the level
of shareholders’ equity income, measuring the shareholders into the company's
unit capital receive profits, which companies create value for shareholders, to
measure the efficiency of the companies using its own capital. In theory, the
higher the modified index values, the better the performance of the company
will be. However, Pratomo and Ismail (2006) stated that management that has the
knowledge to make a company profitable also has the knowledge and understanding
of financial reporting, which leads to more market share price. Galani, Gravas and Stavropoulos (2011)
also stated that when performance is high and the company achieves a high
margin of profit, the managerial groups are motivated to report more
information in order to show off good reputation to the consumers,
shareholders, investors and other stakeholders’ stock prices. Similarly, the
study of Azeem and Kouser (2011) showed significant positive relation with
stock price and return on equity. Also, Liu and Hu (2005) study found that
Return on equity is positively related with stock prices of the firms. They
further explained that when management are performing efficiently and utilizing
the resource powerfully and gives good returns on investment it will affect
stock price positively otherwise it has negative effect on stock price. Zhao,(2013) revealed that in developed
stock markets, investors fully obtain enterprise value on the basis of relevant
information to invest in listed companies. In pursuit of maximization of
investment wealth, the investors are driven by their preference for the good
performance.
2.1.2
Share
Price and
Earnings per Share (EPS)
The term earnings per share (EPS)
represents the portion of a company’s earnings, net of taxes and preferred
share dividends, which is allocated to each ordinary share holder. Earnings per share
(EPS) is widely considered to be the most popular method of quantifying
a firm’s profitability and is the industry standard in determining corporate
profitability for shareholders. EPS is
a carefully scrutinized metric that is often used as a barometer to gauge a
company’s profitability per unit of shareholder ownership. As such, EPS is a
key driver of share prices. The firm stock prices have direct purview in the
managerial efficiency which is one of the signals of firm performances (Remi
2005). One of the components of this firm performance is earning per share (EPS).
EPS is one of the measures of managerial efficiency as well as firm
performance. Shiller (2000) argued that stock prices can be viewed as a
prediction of investors earnings, therefore, it is reasonable that the
variation in prices should be no greater than variation in firm EPS. Ball and Brown (2001) conducted a study to
investigate the annual association between annual change in stock prices and
annual changes in firms EPS. The result obtained shows that annual changes in
stock prices cause firm EPS to change in the following year. Chang and Wang (2008) conducted a study using
Ohlson (1995) model on Taiwan firms in 2004. The result indicates that firms’
stock prices movement has a positive significant relationship with firm EPS. In
the same vein, Chetty, Rosenberg and Saez (2007) explained that stock prices
change behavior when firms’ EPS are announced.
2.3.3 Share Price and Return on Assets (ROA)
Another important measure of firm
performance is return on assets (ROA). For firms with similar business risk
profiles, pretax ROA is a useful statistic for comparing the performance of
firms because it avoids distortions that are introduced by differences in
capital structure and complications in the tax laws (Srijaroen & Jiang, 2011). In the stock market, Ghosh, Nag,
and Sirnmans (2000) confirmed that ROA is widely used by market analysts as a
measure of financial performance, as it measures the efficiency of assets in
producing income. Mishra,Wilson and Williams (2009) indicated that returns on
assets (ROA), a measure of financial performance commonly utilized in the firm
management literature, is the ratio of net firm income plus interest payment to
total assets.
Many studies that investigate
performance are concerned with distinguishing between the effects of market
concentration and stock efficiency on performance (Berger, 1995). Rao, and Syed
(2007) confirmed negative relationship between financial market stock and
performance. While, Quang and Xin, (2014) stated that capital structure is
significantly inversely correlated with firms’ financial performance (as a
measure of ROA).
2.3.4
Share
Price and Dividend per Share (DPS)
Dividend is a widely researched area but
still its fathom has to be explored as numerous questions remain unanswered.
The question of “Why do corporations pay dividends?” has puzzled researchers
for many years. Despite the extensive research devoted to solve the dividend
puzzle, a complete understanding of the factors that influence dividend policy
and the manner in which these factors interact is yet to be established. Allen,
Bernardo and Welch (2000) stated that although
a number of theories have been put forward in the literature to explain their
pervasive presence, dividends remain one of the thorniest puzzles in corporate
finance. The dividend decision is taken after due considerations to
number of factors like legal as well as financial. Garuba (2014), investigated
the impact of dividend per share on common stock returns of some selected
manufacturing firms listed on the Nigerian Stock Exchange (NSE), using linear
regression model. The finding reveals that dividend-per-share affects the stock
returns of the selected manufacturing firms listed on the NSE. He further
explained that the powers for evaluating the impact of dividend-per-share on
the stock returns of the manufacturing firms listed on the NSE relies on the appropriate linear and quadratic stock
returns pricing models. Jirapon and Ning (2006) also find inverse association
between dividends payout and shareholders’ right, indicating that firms pay
higher (lower) dividends where shareholders’ rights are weak (strong). Firth
(1996) examines the effect of relatively large dividend changes on the stock
market reactions and earnings forecast revisions of announcing companies and
their rivals. His results show that dividend increase, produce a significant
positive effect on stock prices while dividend reductions, produce negative
effects on stock prices and forecast revisions of both the announcing companies
and their rivals. While La Porta, Lopez-de-Silanes, Shleifer and Vishny (2000)
explained that firms with weak shareholders’ rights need to establish a
reputation for not exploiting shareholders.
3.
METHODOLOGY
The
researchers made use of the cross sectional and longitudinal research designs
this entails the comparison of the pre-IFRS and post-IFRS performance valuation
in order to sort out the existence of casual effects of one or more independent
variables upon a dependent variable of various companies at a given point of
time. This design is best suitable for this study as a cross section of Nigerian
listed companies will be selected for the analysis over a period of time.
The
population of the study consists of all quoted company on the floor of the
Nigerian stock exchange. The researchers were able to collect complete data for
29 companies for the periods of interest. The variables obtained includes
earnings per share, return on equity, dividend per share, return on asset from
2008-2013.
Model
1: Value relevance of IFRS financial statement
MKTPjt
= α0 + α1ROEjt + α2EPSjt+
α3DPSjt+ α4ROAjt +ejt-
------------------------------- (1)
Where
MKTPjt = the market price per share (SP) of firm j
at time t
α0
= Constant or intercept.
ROEjt
= return on equity of firm j at year t
EPSjt
= Earnings per shares of firm j at year t
DPSjt=dividend
per share of firm j at year t
ROAjt=return
on assets of firm j at year t
ɛjt = Error term
4. Data
Presentation
The
descriptive result of the data collected is shown in table1.
Table1: Descriptive result of data
collected
PRE-SP
|
POST-SP
|
PRE-DPS
|
POST-
DPS
|
PRE –
EPS
|
POST- EPS
|
PRE-
ROA
|
POST -
ROA
|
PRE- ROE
|
POST- ROE
|
|
MEAN
|
44.79
|
65.10
|
91.82
|
102.26
|
180.38
|
207.56
|
0.34
|
0.35
|
0.30
|
0.25
|
MEDIAN
|
21.03
|
26.06
|
41.67
|
66.67
|
110.33
|
138.67
|
0.18
|
0.2
|
0.24
|
0.22
|
MAXIMUM
|
266.5
|
664
|
720
|
575
|
953.67
|
1023.33
|
1.64
|
1.82
|
0.82
|
0.6
|
MINIMUM
|
1.7
|
1.46
|
0.1
|
0.1187
|
0.02
|
0.05
|
0.02
|
0.01
|
0.09
|
0.04
|
STD.DEV
|
66.51
|
128.4
|
154.60
|
145.08
|
234.43
|
266.64
|
0.45
|
0.47
|
0.19
|
0.15
|
SKEWNESS
|
2.16
|
3.77
|
2.91
|
2.39
|
2.20
|
1.95
|
2.08
|
1.99
|
1.48
|
0.70
|
KURTOSIS
|
6.60
|
17.72
|
11.25
|
8.17
|
7.53
|
6.40
|
5.91
|
5.72
|
4.50
|
2.51
|
JARQUE-BERA
|
38.12
|
330.4
|
123.11
|
59.85
|
48.25
|
32.35
|
31.01
|
28.05
|
13.33
|
2.68
|
PROBABILITY
|
5.28
|
0
|
0
|
0.00
|
0.000
|
9.46
|
1.85
|
8.11
|
0.001
|
0.26
|
OBSERVATION
|
29
|
29
|
29
|
29
|
29
|
29
|
29
|
29
|
29
|
29
|
From
table 1 above, the result shows that POST IFRS companies share price, DPS, EPS,
and ROA on the average is higher than those of the PRE IFRS (POST
IFRS α= ₦65.10; ₦102.26; ₦207.56; &
0.35
respectively against PRE-IFRS α =₦44.79; ₦91.82; ₦180.38
&₦0.34 respectively).however the pre-IFRS return on equity is
higher than those of the post IFRS (i.e. pre-ifrs α=₦0.30 against ₦0.25 of
post ROE).From the observations, the researchers decided to carry out other
analysis to further observe the characteristics of the data generated.
4.1 Data
Analysis
The data collected were analyzed using correlation analysis.
This is to ascertain if the pre and post data associate positively or not.
Table
2: Correlation Analysis of dependent and independent variables
PRE SP
|
POST SP
|
PRE DPS
|
POST DPS
|
PRE EPS
|
POST EPS
|
PRE ROA
|
POST ROA
|
PRE ROE
|
POST ROE
|
|
PRE SP
|
1
|
|||||||||
POST SP
|
0.8609
|
1
|
||||||||
PRE DPS
|
0.4290
|
0.1886
|
1
|
|||||||
POST DPS
|
0.4025
|
0.2099
|
0.9362
|
1
|
||||||
PRE EPS
|
0.3751
|
0.1831
|
0.9172
|
0.9738
|
1
|
|||||
POST EPS
|
0.3610
|
0.191
|
0.901
|
0.9689
|
0.9708
|
1
|
||||
PRE ROA
|
0.0735
|
0.0318
|
0.0743
|
0.0278
|
0.0542
|
0.0445
|
1
|
|||
POST ROA
|
0.0319
|
0.0189
|
0.0223
|
0.0889
|
0.1204
|
0.0945
|
0.0945
|
1
|
||
RE ROE
|
0.3785
|
0.5244
|
0.0441
|
0.0908
|
0.1822
|
0.1241
|
0.1212
|
0.1636
|
1
|
|
POST ROE
|
0.5190
|
0.5466
|
0.2264
|
0.1363
|
0.1267
|
0.1578
|
0.0045
|
0.0308
|
0.4827
|
1
|
Source:
fieldwork (2015) Eviews result
The
key variables from the above table are the post-share price and pre-share
price. The result shows that there is a positive association between both
variables implying that, as the share price of the pre-IFRS increase, the share
price of post-IFRS also increased across the periods. This association i.e.
represented by r =0.8609 i.e. 86% of the company’s share price in both pre and
post increased. Based on this analysis, we cannot say any of these periods
affected the value relevance of financial statement.
4.2 Test
of Hypothesis
The
first hypothesis of this study was tested using the regression analysis. This
is because it enables the study to ascertain whether IFRS adoption influenced
value relevance of financial statement.
1.
Ho: IFRS adoption has not improved value
relevance in quoted companies in Nigeria.
H1:
IFRS adoption has improved value relevance in quoted companies in Nigeria.
The
researcher tested the hypothesis above using the following model:
PRESP= f pre (ROA, ROE, DPS, EPS)---------------------------------------------Eq
I
POSTSP= f post (ROA, ROE, DPS, EPS)-------------------------------------------Eq
II
PRESP= α+ β1 (ROA) +β2 (ROE) +β3
(DPS) +β4 (EPS)
POSTSP= α+β1 (ROA) +β2 (ROE) +β3
(DPS) +β4 (EPS)
Table 3: OLS Result
Dependent
Variable: PRESP (POSTSP)
Variables
|
Coeff
|
T-stat
|
Prob.
|
PRE-IFRS
|
POST-IFRS
|
||
R2
(Adj R2)
|
F-Stat.
(Prob.)
|
R2
(Adj R2)
|
F-Stat
(Prob)
|
||||
Coef.
|
-13.62
(-57.33)
|
-0.5155
(-1.2310)
|
0.6109
(0.230)
|
0.37
(0.27)
|
3.5304
(0.02)
|
0.33
(0.22)
|
2.9450
(0.04)
|
PPREROA
(POSTROA)
|
-20.66
-61.98
|
-0.8214
(-0.1620)
|
0.4195
(0.873)
|
||||
PREROE
(POSTROE)
|
151.60
(465.13)
|
2.5334
(3.1803)
|
0.0182
(0.004)
|
||||
PREDPS
(POSTDPS)
|
0.13
(-7.40)
|
0.6796
(0.8156)
|
0.5033
(0.423)
|
||||
PREEPS
(POSTEPS)
|
0.05
(-0.21)
|
0.3710
(-0.6352)
|
0.7139
(0.531)
|
||||
Source:
Fieldwork (2015) Eviews Results
From
table 3 above, we discover that pre & post ROA have negative impact on
value relevance and post-IFRS DPS & EPS have negative impact on value
relevance. The implication is that, the higher these variables the lower the
companies share prices, which means that, the adoption of IFRS has not affected
investors to demand for companies’ shares which would have increased the share
price. Although these observations are not significant since the probability of
these variables are all above 5 % (i.e. prob for ROA is pre=0.4195 post =
(0.873) while post EPS&DPS are (0.531) & (0.423) respectively. On the
other hand the pre-IFRS EPS, DPS; ROE are all positively impacting on value
relevance (i.e. 0.05, 0.13& 151.60) respectively. This is because as they
increase in value the companies’ share prices also increased. By implication,
they affect the share prices positively.
Also
from R2 and (Adjusted R2) showed the extent to which the
systematic variation in value relevance is explained jointly by the predictive
variables. Therefore, this study’s result shows that there is 22% to 33% impact
(adj r2 =0.22 and r2 =0.33) for the post-IFRS period
while the pre-IFRS shows 27% to 37% impact (adj r2 =0.27 and r2
=0.37). This result has shown that the financial statement variables explained
value relevance more in the pre-IFRS era more than in the post era.
OLS
is based on ordinary linearity assumption. The test for linearity is shown in
the F test and its probability result. The result on table 3 shows that there
is a linear relationship between the variables which are significant at 5%
(F=3.5304; Prob = 0.04). This result shows the Pre-IFRS era as having a better
explanatory effect on value relevance.
2. H0: There is no significant value
relevance variable in the pre than in the post IFRS financial statement.
H1:
There is a significant value relevance variable in the pre than in the post
IFRS financial statement.
We
intend to find the variable that has the highest effect on value relevance on
both periods. To achieve this objective, the regression analysis lays an
important role, since it reports the effect of the independent variables on the
dependent variable. From the result in table3 above, we observe that the variable
ROE has positive impact on the value relevance during both periods under study
(PREROE =151.60; POSTROE =465.13) and they are both significant at 5% (i.e.
0.0182 (0.004) respectively). Thus, ROE is the most impacting variable. However
it had the greater impact in the post-IFRS period. In view of the above, we
refuse to reject the H0 while H1 is rejected, this means
that return on equity is significantly greater upon the adoption of IFRS.
3. H0: There is no difference in the
value relevance of the pre and post IFRS financial statement.
H1:
There is a difference in the value relevance of the pre and post IFRS financial
statement.
We
conducted a t-test to ascertain whether there is a difference between the value
relevance of the financial statement of both periods. Table 4 below shows the
result.
Table 4 Result of t-test statistic
N
|
α
|
Std.dev
|
Std
Error
Mean
|
tcalc
|
Df
|
significance
|
|
Postsp
|
29
|
65.0952
|
128.3906
|
23.8415
|
1.389
|
28
|
0.176
|
Presp
|
29
|
44.7866
|
66.5164
|
12.3518
|
Source: Fieldwork (2015) Eviews Results
From
the table, the test result shows that tcalc = 1.389 while the
critical value of 2-tailed t = 2.0484. The decision therefore is
that we fail to reject the null hypothesis hence, we say, there is a difference
between the value relevance that investors attach to pre-IFRS financial
statement than that of the post-IFRS financial statement. Though this finding
is not statistically significant at 5% (i.e. prod = 0.176). Thus, H1 is
accepted while the H0 is rejected, indicating that there is a
difference in the value relevance of the pre and post IFRS financial statement.
5. FINDINGS, CONCLUSION AND RECOMMENDATONS
From
the result of the analysis, it was discovered that IFRS has not improved value
relevance in quoted companies in Nigeria. Table 3 showed that the pre &
post ROA have negative impact on value relevance (i.e. Prob for ROA is Pre=
0.4195,Post=0.873), this finding is not consistent with Garuba (2014), Jirapon
and Ning (2006) .While on the other hand the pre-IFRS EPS, ROE are all positively impacting on the
value relevance (i.e. 0.05,0.13 & 151.60). Also, the result has shown that
the financial statement variables explained value relevance in the pre-IFRS era
more than the post-IFRS in findings of Takacs (2012), it was discovered that during
IFRS era, firms tend to exhibit higher values on a number of profitability
measures such as EPS, DPS, ROA this tends to show disagreement with the
researchers findings and this is explained by a number of factors such as
quality of management, global and local economic conditions, business
performance during the years under review (2008-2013). The test for linearity is shown in the f-test
and its probability results. The result on table 3 shows that a linearity
relationship exist between the variables and significant at 5 % (F =3.5304; prob
= 0.02) in the pre-IFRS while it is also 5% significant in the post IFRS (F =2.945;
Prob = 0.04). This result showed the pre era as having a better explanatory
effect on value relevance.
Also
the result shows that there is a significant value relevance variable in the
pre and post IFRS financial statement. From the table 3 it was observed that
the ROE has positive impact during both periods under study (PREROE =151.60;
POSTROE =465.13) and they are both significant at 5% (i.e. 0.0182 (0.004)
respectively). Thus, ROE is the most impacting variable but had the greater
impact in the post-IFRS periods. This finding is consistent with liu and Hu
(2005).
The
study also shows that from t-test statistic result in table 4 the result showed
a lesser tcalc = 1.389 while the critical value of 2-tailed t = 2.0484.
The decision is that we fail to reject the null hypothesis hence there is a
difference between the value relevance that investors attach to pre-IFRS
financial statement than that of the post-IFRS financial statement though this
finding is not statistically significant at 5% (i.e. prob = 0.176).
5.1 Conclusion
This
research work examines the value relevance of IFRS financial statement in
quoted companies in Nigeria. Value relevance is seen as a proof of the quality
of accounting numbers and as such it can be interpreted as the usefulness of
accounting data for decision making process of investors. The study has made an
immense contribution to the value relevance literature by examining the value
relevance of IFRS financial statement in quoted companies in Nigeria. The
results demonstrate that, so far, there has been no impact of IFRS financial
statement in quoted companies in Nigeria. Four variables were used to ascertain
their impact on share price in quoted companies in Nigeria. Among the four
variables, return on equity is the most significant value relevant variable in
the pre and post IFRS financial statement. Therefore, we conclude that IFRS has
not improved value relevance in the country.
5.2 Recommendation
Following
the study’s findings, these recommendations are presented which may be of use
to National Standard Setters, preparers of accounting information and
investors;
1.
Companies should ensure that existing
business reporting model is amended to suit disclosure and reporting requirement
of IFRS.
2.
National accounting standard setters and
preparers of accounting information should make effort toward improving the
quality of DPS & EPS information which is the most widely used performance
variable in Nigeria for investment decision.
3.
The accounting standards setters should
enhance the compliance of the financial reporting standard requirements in
order to increase the value relevance of IFRS financial statements.
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