IMPACT OF INTERNATIONATIONAL FINANCIAL REPORTING STANDARDS ON PERFORMANCE OF QUOTED CONSUMER GOODS COMPANIES IN NIGERIA

Abstract

International Financial Reporting Standards (IFRS) is a global principle that specifies how company’s financial statement is to be prepared and presented, it includes rules about the information to be included or disclosed on financial statements. This study seeks to investigate the Impact of IFRS adoption on Performance of Quoted Consumer Goods Companies in Nigeria with a view of empirically establishing the performance of the companies before and after the adoption. For the study, an ex-post-facto research design was adopted. Secondary data from the audited annual financial statements were derived from ten (10) of those consumer goods companies from the population of consumer goods companies listed on the Nigerian stock exchange for a period of fourteen (14) years [2005-2018] broken down into seven (7) before adoption and another seven (7) years after adoption. The data analysis was using the paired T-test (to determine the differences in means in the pre-IFRS and post-IFRS eras). Based on the findings of this study, impacts of the adoption of IFRS on performance of quoted consumer goods companies in Nigeria can be stated as positive. Results show nonsignificant difference between IFRS adoption and profitability of the listed consumer goods companies in Nigeria. Study also found a non-significant difference in average market performance ratio from the period before adoption to periods after adoption after the test of hypothesis was carried out. Finally, the study found significant increase in firm value evidenced by an overall increase in average firm value from the period before adoption to periods after adoption of IFRS. This study concludes that, although the adoption of IFRS might not be significantly relevant to the performance of Nigerian Quoted Consumer Goods Companies in term of profitability, it can be argued that it enhances firm value. The study recommends an increment in the level of awareness of the benefits of IFRS adoption among managers and other stakeholders.