ENHANCING FINANCIAL REPORTING QUALITY: DOES THE IMPLEMENTATION OF INTERNATIONAL FINANCIAL REPORTING STANDARD MATTERS IN DEVELOPING ECONOMIES?

Abstract

This study investigates the association between the mandatory adoption of international Financial Reporting Standards (IFRS) and financial reporting quality (FRQ) using earnings smoothing and value relevance models. Guided by the agency and signaling theories, data were collected from the published accounts of commercial Banks listed between 2007 to 2016 in the Nigerian stock exchange. The earnings smoothing model revealed that the implementation the IFRS has both positive and negative effect on the financial reporting quality of Nigerian banks. It also showed that the information disclosed in financial statements of Nigerian banks are value relevant. Accordingly, the study concluded that the adoption of IFRS is not an absolute assurance that information disclosed in financial reports are free from managerial manipulations. Specifically, the study observed that the monitoring and enforcement functions of the relevant Nigerian authorities are less than expectation.