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IFRS ADOPTION AND EARNINGS MANAGEMENT IN NIGERIAN NON-FINANCIAL QUOTED COMPANIES
Abstract
The study investigated the effects of IFRS adoption on earnings management of non-financial quoted companies in Nigeria. The study utilises a sample of seventy-five non-financial quoted companies in Nigeria that has consistently published their audited annual financial report between 2010 and 2014. A dummy variable was used to separate period of pre and post adoption period; before January 2012 and year-end 2014. The data collected were subjected to descriptive analysis, correlation analysis and a panel multiple regression analysis to explore both trends and possible effects of IFRS adoption on general earnings management. The results established that IFRS adoption in Nigeria does not significantly affects the tendency of Nigerian companies to manipulate earnings. Specifically, the higher audit quality and large firm size does not create a situation where IFRS adoption affects earnings management, this is contrary to the general belief that IFRS, as high quality accounting standards will reduce the possibility of earnings management. By implication, the findings corroborate with arguments that there is no special shield in IFRS that will protect accounts from engineering.
Keywords: IFRS, Earnings management, Audit quality, Firm size, Nigerian non-financial quoted companies.