Abstract:
The adoption of the International Financial Reporting Standards (IFRS) has limited the accounting available options in the preparation of financial statements. As a result of the more severe procedures in the implementation of IFRS, many people feel that using the standards will inadvertently reduce the tendency for earnings management. The objective of this study was therefore to examine the impact of international financial reporting standards (IFRS) on earnings management of deposit money banks in Nigeria. Using ex-post facto research design, the estimated population size consists of all 23 deposit money banks in Nigeria while a sample of 10 randomly selected deposit money banks in Nigeria was derived using the simple random sampling technique. Control variables that were used in this study included Operating Cash Flow, Financial Leverage, Non-Performing Loans (NPL) ratio, and Return on Assets and dependent variable was firm Earnings Management (loan loss provisions). The data was subjected to independent-samples t-test to test the research hypotheses. The result hence indicates that adoption of standards IFRS reporting may have contributed significantly and positively to the operating cash flow of the listed DMBs in Nigeria with a p-value of 0.042 (p<0.05), there was an upsurge in financial leverage in the period after adoption of IFRS by the DMBs, the difference was not statistically significant (p=0.169), Findings revealed that there was reduction in NPL in
the period after adoption of IFRS (M=0.192) by the DMBs, compared to the period before adoption of IFRS (M=1.576). However, the difference was not statistically significant (p=0.396), it can also be inferred that the impact of IFRS adoption on the profitability of the DMBs in Nigeria is significant (p=0.035). This study however recommends that those companies that have adopted IFRS should be consistent in adherence to IFRS standards and requirements so as to preserve and sustain the gain which the adoption of IFRS has brought, more importantly to the DMBs. The study also recommends that increase in the level of awareness and campaign among managers, investors and other stakeholders, specifically the non-adopters, on the imminent
benefits of adopting IFRS. Keywords: IFRS, Operating Cash Flow, Profitability, Financial Leverage, Return on Assests
