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Chapter One
Chapter One
INTRODUCTION
An accounting standard may be a rule or sets of rules, that prescribes the strategies by
which accounts ought to be prepare and present to various users group. However, IFRS are
standards which established the final rules by which specific activities in financial terms are
to be treated in the financial statement. The financial statement may be a statement that serve
as the sources of information, and it is use to disclose and determine the financial position,
performance, and changes in financial position of an entity over a certain period of time. The
users of financial statement (mostly investors) use information derived from the financial
reports to make useful economic decision which will have an effect on their investments. The
expectation thus is that IFRS ought to have the potential and capability to support and turn
out qualitative and sturdy financial information that's timely, correct and well detailed in all
ramifications.
Furthermore, it's expected that the proper disclosure and fair presentation demand of
IFRS compliant financial statement can eliminate or cut back discrepancies arising from
enhance the standard of the financial reporting of companies concerned in each native and
foreign business transactions. Literatures on IFRS have shown that the dynamic risk-return
superstructures, international trade and finance, however, because of the emergence and
development of multinational business considerations informs the main reason for the hunt
for convergence of world financial reporting across the national boundaries. Before
convergence, bilateral trade likewise the multinational business transactions were sweet-faced
with the challenges of examination or comparism of books of accounts which are already
being treated completely with different standards from mercantilism partners. “The result
emanating from such comparison reveals that financial statements are no longer represent the
facts they're expected to disclose. With the effort to bridging the reporting gap and make sure
that accounting standards from different countries are harmonise and improved upon so as to
make sturdy and useful financial decisions, it became imperative since the 1970s for the
International Accounting Standards Board (IASB) and also the European Union (EU)) to
hitch forces along to harmonize accounting rules in several countries”. Olaoye (2020)
Financial Reporting Standards (IFRS) for firms listed or the one seeks to be listed on stock
exchanges worldwide (Stenka, Ormrod, & Chan, 2018). The International Financial
Reporting Standards may be a set of high-quality world accounting standards and rules issued
by the International Accounting Standards Board (IASB) of UK for the preparation and
(IASB, 2016; ICAEW, 2013). These International Accounting Standards (IASs) and
International Financial Reporting Standards (IFRSs) are posited to function a guide in the
As at 31st March 2018, one hundred and fifty (150) countries have adopted IFRS
(IASB, 2018) yet, the implementation rate differs across countries and continents of the
globe. In 2005, European Union (EU) directed all listed firms in Europe to migrate from
national accounting standards to IFRS. Also, the US Securities and Exchange Commission
(SEC) allowed foreign companies that were mercantilism on the U.S.A. Stock Exchanges to
report their financial statements in line with IFRS rules. Kighir et al (2018).
In recent times, there are considerations among financial statements users, regulators,
investors and also the general public on the high quality of financial reports made by the
banks in Nigeria and every other country all over the globe. it's during this regard that Nigeria
improvement in technology and financial process of the capital market has inflated the flow
of capital in several counties through foreign direct investment. it's thus necessary to know
the impact of changes in Accounting Standards on the earnings of banks in Nigeria. The most
standard that was published by the International Accounting Standard Board to help preparers
mandatory report of an entity every twelve calendar months. Stakeholders in any organization
can wish to be inform concerning the performance of the organization. The information is
often gotten through the published financial statement. Before the last 20 years different
different countries for proper disclosure and measurement didn't allow comparison of
financial statements between different countries to be true and fair (Adelusi and Ibigbami
2017). The issue relating to comparism of financial statements diode to the search and
accepted rules and principles rather than the individual national standards.
The Banking sector plays a crucial role in the growth and development of the
economy of every nation. It additionally signifies the thrust of any economy, so it's
chargeable for the availability of funds to different productive sectors of the Nigerian
economy, and thus it's important to the growth and development of different Nigerian
economic sectors. Hence, it's necessary for manager and different decision makers to take
care of confidence in the banking nation. However, given the role the banking sector plays in
the growth and development of each country, there's an increased demand for prime quality
of accounting standards to produce managers and business owners with the mandatory
resources in making very important decision such that the topic matter of IFRS can't be
Nigerian banks over the years are determined to exhibit weak disclosures in financial
practice that impedes their performance and makes it very difficult to sight the issues with
ease. However, the reporting quality and standard of financial reporting in Nigerian banking
sector seems to not match the high standard of reporting in the banking sector of a lot of
developed countries (Garba, 2013). As a results of this, Nigerian banking system has
undergone varied reforms. This includes the rise in the minimum paid in capital of banks
from 2billion Naira (US $14m) to twenty-five billion Naira (US$173m). This simply led to
the consolidation of most banks. Alternative reforms embrace the special examination of
banks, the move from accounting year to the calendar year to enhance transparency and
comparison of financial results and also the creation of AMCOM (Asset Management
Other reforms were within the sort of circulars. financial organisation of Nigeria
issued a circular on the format banks were expected to indicate in their annual financial
statements, the most range of years that a CEO might work was restricted to 10 years. Also,
the cashless policy was introduced and also the convergence to IFRS by the end of 2012 to
mention a vew. It's noteworthy that before January 2012, three (3) banks in Nigeria, Access
Bank, Guarantee Trust Bank and Zenith Bank started preparing and publishing their financial
reports per IFRS. Are there any implications of the adoption of IFRS on the wealth of those
In line with the Universal practice, Nigeria in 2012 adopted the International
Financial Reporting Standards (IFRS) in conjunction with another twenty-two (22) African
(FRCN) a government regulatory body directed all listed firms in Nigeria to migrate from
from first January 2012 (FRCN, 2015; Madawaki, 2018). Within the spirit of globalization,
the Nigerian Stock Exchange (NSE) and also the Nigeria Securities and Exchange
Commission (SEC) make it obligatory for all firms trading and desire to be listed on the
ground of the Nigerian Stock Exchange to adopt IFRS reporting so that their financial
Nwude, 2012, posits that it had become worrisome to the shareholders in Nigeria
when the value and price of the shares crashed in 2007, it's going to not be unconnected with
the economic meltdown globally. Despite this fact, firms in Nigeria exploited the loopholes
of the Nigeria Generally Accepted Accounting Practices and given financial statements that
were spectacular by declaring dividends to shareholders, however firms couldn't offset the
Poor corporate governance practices and creative accounting caused the takeover of 5
DMBs in 2009 by Central Bank of Nigeria. The 5 DMBs are Afribank Nigeria Plc., Oceanic
Bank Plc; Platinum Habib Bank Plc., Intercontinental Bank Plc., and Spring Bank Plc (CBN,
2015). Nigeria Deposit Insurance Corporation (NDIC) and also the Central Bank of Nigeria
(CBN) intervened by injecting 650 billion Naira (the equivalent of USD 4.13 billion) to save
lots of depositors’ fund and bank stakeholders (CBN, 2015; Akinleye (2017)). Investors
raised considerations that the financial statements made by listed firms in Nigeria before the
adoption of IFRS are not adequate and lack credibility (NSE, 2015; Shehu, 2017).
Jensen and Meckling (1976), in their agency theory, posits that conflict arises once
agents (managers), pursue their interest (high pay, higher perks, and nice bonuses) to the
involved in window dressing of financial reports and unethical practices, and this adversely
Potential investors, shareholders and other users of the financial statements like managers,
suppliers, creditors, and government want IFRS compliant financial statements that they will
admit for decision making (IASB, 2016; Alexander, Britton, & Jorissen, 2018).
This research study tries to seek out if the adoption of IFRS has improved information
imbalance of those banks and how significant it has impacted the shareholder's wealth since
IFRS adoption. The study covers 2007 to 2017 with five years before and five years after the
adoption of IFRS by Nigeria in 2012 by vital public entities, and this is often to permit a pre
foreign direct investments, and also the cost of capital (Nnandi & Soobaroyen, 2015; Shehu,
2015; Okafor & Ogiedu, 2017), without investigation the results of IFRS adoption on the
general public have an interest and can need to make sure that financial reports made by
organisations are of prime quality in term of fair view, that is, truth position is shown by the
statement made. A several work had been undertaken in developed economies. (Blanco and
Osma, 2018; Robyn and Graeme, 2019), furthermore as range of studies on IFRS and wealth
allotted in developing countries, despite the numerous researches that had been done on the
topic, discrepancies still exist. (Iyoha and Faboyede, 2019; Ojeka and Mukoro, 2017).
Researchers have reported positive impact of IFRS on the operating profit of firms (Bushman
and Landsman, 2019), whereas others posited that IFRS doesn't affect the operating profit of
an entity. Results from some studies additionally declared that impact of IFRS is negative on
the operating profit owing to the cost involved in preparation of globally comparable
financial statement. Indeterminateness of the results of past researches on IFRS impact and
also the imbalance information in the reports of researches prompted this study to look at
factors have an effect on the wealth of Money Deposit Banks in Federal Republic of Nigeria.
i. What is the significant effect that IFRS adoption have on Return on Equity of listed
ii. What is the significant relationship that exist between IFRS adoption and Market
Value per Share (MVPS) of listed Deposit Money Banks (DMBs) in Nigeria?
iii. What is the significant relationship that exist between IFRS adoption and Earnings per
The main objective of the study is to empirically assess the impact of IFRS adoption
ii. To examine the significant relationship between IFRS adoption and Market Value per
iii. To examine the significant relationship between IFRS adoption and Earnings per
Based on the objectives of the study, the hypotheses guiding the study are stated and
H01: The adoption of IFRS does not have any significant effect on Return on Equity of listed
H02: There is no significant relationship between IFRS adoption and Market Value per Share
H03: There is no significant relationship between IFRS adoption and and Earnings per Share
These research covers the selected Money Deposit Bank in Nigeria, while Wema
Bank Plc, First Bank Nig. Ltd, Union Bank Plc, United Bank for Africa Plc and Guarantee
Trust Bank Plc, will be used as a case study. In order to attain the objectives of this research,
the scope of the study is defined to involve all relevant annual financial report published by
the selected Money Deposit Bank for the period of five (5) years before adoption of IFRS in
Nigeria in 2012 range from 2007 to 2011 and (5) five years after its adoption range from
2013 to 2017.
different group of people, however the outcomes of this study are anticipated to benefit the
followings;
This study will benefit the government in the sense that, it will enable them to identify
how well the Money Deposit Bank in Nigeria are being manage and how credibility their
financial report is to disclose all their operation base on IFRS principles. And it will also help
government to know its significance on the wealth of Money Deposit Bank in Nigeria, which
also affect the Banks profitability, and this will help the government to know how well to
monitor the tax responsibility of such Bank. It will also help government to visualise the
influence of fraud risk management on tax liability of the Money Deposit Bank in Nigeria,
and this study is anticipated to proffer solution to this through proper adoption IFRS.
Another stakeholder that will also benefit from this study is the general public,
because it will enlighten them, on the effect of IFRS adoption on corporate performance of
Money Deposit Bank in Nigeria and its significant effect on their wealth. In this wise, it will
help the public to understand how well the Bank is being operated and manage in order to be
free from fraud risk, so as to secure public deposit in such Bank and to encourage the general
public to deposit more of their money in such Bank without doubt. So this study is intended
to help the general public to have more insight on the effects of adoption of IFRS on Money
Another set of people that will also benefit from this study is foreign investors,
because it will provide them necessary information on the factors to be consider before
investing in a particular Bank situated in another country. This study will enable them to
identify benefits they will derive from such Bank if they invest their resources, because this
study is tending to give them more insight on what make up the IFRS adoption and its
knowledge on the significance of IFRS adoption on wealth of Money Deposit Banks will help
Another body that will benefit from this research study is Money Deposit Banks in
Nigeria, because it will give them more insight on how IFRS adoption is critical for the
proper disclosure of their financial transaction and perpetual existence of such Bank.
Understanding the concepts of IFRS adoption by Money Deposit Bank will significantly help
such Bank to make proper decision on appropriate measure to be put in place to ensure
Lastly, Researchers will benefit from the outcome of this study as it serves as a
reference material when trying to assess the impact of IFRS adoption on the wealth of Money
Deposit Bank in Nigeria. Also, this study was of great importance and relevance to students
of accounting and other related courses for research purposes and personal development.
performance and wealth of Money Deposit Bank in Nigeria, taken Wema Bank Plc, First
Bank Nig. Ltd, Union Bank Plc, and United Bank for Africa Plc, and Guarantee Trust Bank
However, this research study has been limited to the only selected Money Deposit
Bank in Nigeria, with exclusion of public sector or any other listed company that is not
Money Deposit Bank in Nigeria such as manufacturing, construction and other companies
Money Deposit Bank: This can be refers to as the financial institution licensed by the
regulatory authority to mobilize deposit from the surplus unit and channel the funds through
loans to the deficit unit and performs other financial services activities.
Shareholders’ Wealth: This is one of the objective of every business establishment, it is the
ability of an organisation to maximise profit which will significantly increase the value of the
shareholders of such company. It is when the company are able to increase the EPS, ROE,
Return on Equity: Return on Equity can simply be defined as the net profit after tax which
is tends to be divided by shareholder’s equity, which is given by net worth. It is also noted
that the ratio depicts earnings power on share holders’ book value investment.
resources, with which one is entrusted and to ensure that it is used for the right purpose.
Accountability as the obligation to demonstrate that work has been conducted in accordance
with agreed rules and standards and the officer reports fairly and accurately on performance
Credibility: For the financial report of Money Deposit Bank to be relevant, it must be able to
be trusted by the users. So credibility is a terms that determine the quality of the financial
report produced, to enable the users of such to make proper economic result as at when due.
So adoption of IFRS ensure credibility of the financial report of Money Deposit Banks.
Reliability: This is another term that is used to measure the dependability of the financial
report produced by Money Deposit Banks. This enable the users of the report to make
informed decision on such report without prejudicing, whereas adoption of IFRS will help to
Integrity: This is another term that influence the Bank managers to discharge their duties in
accordance to moral ethic principle, by being honest and transparent in all their financial
transactions they engage in. And this will be quite achieving through the adoption of IFRS.
International Financial Reporting Standard: This is the standard established for all
business establishment all over the world, so as to ensure the Harmonization, Credibility,
Ethical Code/Standard: This is connected with morally correct or acceptable beliefs and
principles about what is right and wrong. The outlined behaviour expected of an
Transparency: Is a term that ensure the openness of financial report and it ensure that, there
is nothing hiding in the report and the report show true and fair view to enable the users make
informed economic decision as at when due. And this will be quite achieving through the
adoption of IFRS.
CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
International Financial Reporting Standard and wealth of listed Money Deposit Bank in
Nigeria. However various published literature will be review to achieve the purpose of this
study. Whereas we are going to examine “Conceptual Clarification” which will be denoted by
2.1, and under this half we are going to examine various concepts of International Financial
Reporting Standard and wealth of listed Money Deposit Bank in Nigeria. And also in this
chapter we will consider “2.2 Empirical Review” while we are going to examine various
literature and journals related to the purpose of this study, in order to achieve the purpose of
this study. And also we will consider “2.3 Theoretical Framework” where we are going to
examine various related theories to achieve the purpose of this study. And in conclusion we
are going to consider “2.4 Conceptual Framework” where all variables to be used in this
which information is obtained to assist financial, political and social practices. Accounting
in the sense that it remains as rules that characterize how organizations ought to show
exchanges and occasions in their financial reports. Despite the very fact that, researchers and
reports, many researchers have argued that the degree that principles are forced and moreover
the speed resistance arraigned are just about as elementary as the actual standard. In this wise,
the significant benefit of accounting principles, its implementation and adherence to its
standards by players in the business, can to a large extent justify the worth of financial
norms, if imperative moves aren't created after the foundations are broken, the rule would
continue being simply a solicitation in paper. Accounting guidelines and principles is quite
and responsibility, that also improves how client’s decide quality in an economy. There are
difficulties in financial disclosure of the continual choice of the IFRS internationally. Various
countries make disclosure of financial information in accordance with the IFRS for several
years, and were more expected to return on stream from 2012. An essential most up-to-date
the Greek obligation, banking space problems and more endeavours of lawmakers to work
out these inquiries has complete into tension on standard-setters to change these principles.
Ogunmakin (2021)
International Financial Reporting Standards (IFRS) are body of prescriptive rules and
guidelines with Universal reach and attractiveness that offer direction and steerage on how
business enterprises in a globalised world may deliver the goal of correct record keeping,
They're set of international accounting standards stating how explicit kinds of transactions
and different events ought to be disclose in financial statements. Ademola and Ajao (2019)
IFRS are issued by the International Accounting Standard Board, and which they
specify significantly how accountants should maintain and report their accounts. IFRS were
established so as to have common language, so that business and account are often
understood from company to company and country to country. Thus, failure on the part of the
firm to make use of the requirement of IFRS would lead to inconsistencies, lack of
responsibility and transparency, distortion in financial reports, that successively results into
poor financial reports practices and dissemination of accounting information that's of less
value to any explicit group of users. this can be as a result of the preparation and presentation
comparability, and so leads to fraudulent business practices which thereby result in business
Standard Board (IASB), an independent organization primarily based in London, UK. Before
(IAS) were issued by the IASB’s predecessor organization, the IASC, a body established in
Canada, France, Germany, Japan, Mexico, the Netherland, UK and Ireland, and also the
USA. In 1997 when nearly twenty-five years of accomplishment, IASC recognized that to
still perform its role effectively, it should find how to evoke convergence between national
accounting standards and practices and high-quality Global accounting standards. The new
Standards setting body was renamed as International Accounting Standards Board (IASB)
and since April 2001, it's been playacting the rule-making function. Parts of IASB structure
The Nigeria’s Federal Executive Council (FEC) gave approval for the convergence of
Nigerian SAS with the IFRS from Jan 1st, 2012. The adoption was organized such that all
stakeholders use IFRS by Jan 2014. As to the IFRS adoption Roadmap Committee (2010),
Public Listed Entities and major Public Interest Entities are expected to adopt the IFRS by
Jan 2012. All different Public Interest Entities are expected to compulsorily adopt the IFRS
for statutory functions by Jan 2013, and little and Medium-sized Entities (SMEs) shall
compulsorily adopt IFRS by Jan 2014. Nigerian listed entities were needed to organize their
closing balances as at December 31, 2010 to IFRS. The closing figures of December 31, 2010
can become the gap balances as at Jan 1st, 2011 for IFRS primarily based financial
statements as at December 31, 2011. The gap balances for Jan one, 2012 are going to be the
primary IFRS full financial statements ready in accordance with the supply of IFRS as at
Before 2012, the Statements of Accounting Standards was utilized in all accounting
practices in Nigeria. These native accounting standards are issued in Nigeria by the Nigerian
Accounting Standard Board (NASB) until 2011 in accordance with Section 335(1) of the
Company and Allied Matters Act of 1990. In the wake of economic crises in late 1990s, the
international community stressed the main role which the observance of international
Though the Nigerian Statements of Accounting Standards (SAS) are almost like IFRS in
bound respects, several variations exist. SAS publicized by Nigeria Accounting Standard
Board (NASB) were for the most part supported past IAS publicized by IASC. Because of the
increasing quality of financial report’s needs, a number of the initial IASs were reviewed
leading to their modification or withdrawal. The SASs weren't reviewed or updated with the
IASs/IFRSs. the numerous disparities between the Nigerian SASs associated IFRSs have
resulted in the SAS being considered noncurrent and incomplete as an authoritative and
NASB to promote general acceptable published financial reports and top quality accounting
standards that are in line with international practices, inaugurated a Stakeholders’ Committee
on the Roadmap to the Adoption of IFRS in Nigeria on October 22nd, 2009. In July 2010, the
Nigerian Federal Executive Council approved the Roadmap to the Adoption of IFRS in
Nigeria (NASB 2010)., it had been shown in the report that, that it'll be in the interest of the
Nigerian economy for reporting entities in Nigeria to adopt globally accepted, top quality
The Nigerian banking sector is created from commercial banks and other financial
establishments like finance firms, micro-finance firms, discount houses and mortgage
institutions. The Central Bank of Nigeria (CBN) regulates their activities. The CBN has
licensed solely twenty-one commercial banks to interact business in Nigeria. Out of which
fourteen are listed banks. Nigerian listed banks and other public and vital public interest
entities were needed to adopt IFRS for years starting on or after Jan 1st, 2012. Among the
listed firms, the listed banks were the first to finish the transition and have adopted the
standard for reporting. Several alternative variations exist between NGAAP and IFRS
excluding Fair value orientation and non-controlling interest. Those embrace variations
associated with revenues, property, plant and Equipment, intangibles, financial instruments,
hedges, asset retirement obligations, worker future benefit, share-based compensation, leases,
income tax, foreign currency translation, and strategic investments (CICA, 2019).
of standards are inferred through the examination of variations that transpire in actual
financial statements of reporting Nigerian Banks. Variations in the application are doable
because of the principle-based approach underlying each IFRS and NGAAP, as professional
judgment plays a serious role in the process of deciphering and applying principles. As an
example, the theoretical rational for impairment write-off (i.e. conservatism) is analogous in
IFRS and NGAAP, but the factors used for distinguishing things that need such a write-off
dissent. Since the quantity of impairment losses is also material in practice, the recongnition
versus non-recognition of impairment losses has the potential to considerably have an effect
on profit/loss disclosed in the income statement. This can be the empirical proof in the
application of standards and is critical to assess the important impact of variations between
IFRS and NGAAP. This is still true not just for variations consider to be elementary (such as
those associated with fair value accounting and non-controlling interest), however conjointly
for those considered as accessory or minor from a theoretical purpose of view. Ademola and
Ajao (2019)
The adoption of IFRS has many benefit. Ekwe et al (2020) highlight number of these
benefit as follows;
1. Promotion of the compilation of meaningful and significant data on the performance of
varied reporting entities at each public and private levels in Nigeria thereby encouraging
Investors will simply compare financial results of corporation and make appropriate
investment decision.
3. Attraction of Foreign Direct Investment – countries attract investment through high level
5. Reduction of the high cost of doing business across borders by eliminating the requirement
Nigeria.
In addition, Ahmed (2019) stated that, adopting IFRS reduces information spatiality
which might lower cost of equity and debt finance, it smoothens the communications between
operators, shareholders, lenders and other interested parties leading to lower cost. IFRS
adoption, would offers comparability, lower transaction cost and larger international
investment and reduces accounting manipulations and completely impacts firms‟ stock return
Prior to the implementation of IFRS in 2012, Nigeria makes use of the Nigerian
statement. The Nigerian Accounting Standard Board (NASB) is seen as a body sovereign
charged with the duty to develop and issue Statement of Accounting Standards (SAS) for
financial statements preparers and users. The Federal government of Nigeria in 2010
designed the roadmap to be followed for a successful IFRS adoption in the country which
incorporates three (3) phases. Financial statement prepared in compliance to IFRS contains
Statement of Changes in Equity, Statement of cash Flows and Accounting Policies. The basic
theories supporting NG-GAAP and IFRS don't seem to be on the entire parallel. The origin of
IFRS has caused an excellent deal of responsibility on the part of IASB in setting
International Accounting Standards (IAS) that may match totally different business entities
across the world. Local professional accountants and auditors ought to follow the content of
the frameworks which structure the financial statement to enable them to provide clarification
important for countries and firms to return along and become additional competitive across
the world. Therefore, IFRS is committed to harmonizing the distinction accounting practises
across the globe by providing information that are comparable, reliable, relevant, consistent,
and reduce cost of capital of transacting businesses across borders (Essien-Akpa, 2017).
However, the successful implementation of IFRS depends on the flexibility of the general
public to translate native and international financial information into IFRS financial language.
Some studies like (Ogunmakin et al, 2021; Ademola and Ajao, 2019; Ekwe et al, 2020)
argued that the adoptions of IFRS would motivate additional comparable, reliable, relevant,
and consistent financial reporting information across the globe. Due to the planned
advantages of IFRS, it's predictable that the implementation of IFRS can give prime quality
of financial reports that are comparable, reliable and comprehendible for the reporting entities
Furthermore, the adoption of IFRS will improve the reliability and comparability of
financial reports disclose in the Nigerian banking sector. However, it's usually believed that
users of financial reports appreciate the importance of providing high quality of accounting
standards that are consistent and comparable in reflecting the financial reality of transactions.
Matthew (2018) urged that the Nigerian government should support the adoption of IFRS
notably in the space of implementation and compliance as a matter of urgency to modify full
realization of the country’s economic potential. Similarly, Nyor, (2020) argued that Nigerian
corporations ought to adopt the IFRS as a results of the actual fact that it'll pave the approach
for higher accountability, transparency and enhance the standard of reporting in Nigeria.
Hossain et al. (2015) investigated the adoption of IFRS in an emerging economy like
Republic of Bangladesh. The study found that the adoption of IFRS is probably going to
profit the People's Republic of Bangladesh economy through increased financial reporting
quality, improve access to international financial markets, attract foreign direct investment,
scale back cost of capital, and conjointly intensify the capability of organisations to secure
Ogunmakin (2021), posited that disappointments in the financial space have called the
executive and administrative bodies altogether to assess the insurance and dependability of
the banks by assessing the degree of consistence to the 159 adoption of International
lawful amendment methods centred towards sanctioning the board to cut all the additional
quickly with problems with hassle in the financial business. The provision of the consistence
Number of reasons were provided for the low level of adoption of IFRSs for banks.
However, variety of explanations were brought forth including disposition to figure and settle
for more of principles-based set of accounting standards compared to the rules-based IFRS
(Ekwe et al (2020)).
1. Level of Awareness
The transition decision to IFRS and its implications for preparers and users of
coordinated and communicated. This could embody raising awareness on the potential impact
implementation of IFRS needs proper preparation both at the country and entity levels to
confirm coherence and supply clarity on the authority that IFRS can have in regard to other
preparers and users of financial statements, auditors and regulatory authorities. Countries that
enforced IFRS moon-faced a spread of capacity-related problems, based on the approach they
took. One among the principal challenges Nigeria could encounter in the sensible
implementation method, shall be the shortage of accountants and auditors who are technically
competent in implementing IFRS. Usually, the time lag between decision date and the actual
implementation date isn't sufficiently long to train an adequate number of professionals who
3. Training Resources
IFRS. Together with these accountants, governance, financial analysts, auditors, tax
and information officers are all chargeable for swish adoption process. Training materials on
IFRS don't seem to be pronto obtainable at reasonable cost in Nigeria to train such a large
4. Tax reporting
The tax issues related to the conversion to IFRS, like alternative aspects of a
conversion, are complicated. IFRS conversion demand a close review of tax laws and tax
administration. Specific taxation rules would have got to be redefined to accommodate these
changes. for example, tax laws that limit relief of tax losses to four years ought to be
reviewed. This can be as a result of transition changes which could end in vast losses which
will not be recoverable in four years. Accounting problems which will show vital tax burden
5. Amendment to Existing
Laws in Nigeria, accounting practices are ruled by the Company and Allied Matters
Act (CAMA) 1990, and the Statement of Accounting Standards (SAS) issued by the Nigerian
Accounting Standards Board (NASB) and other existing laws like Nigerian securities market
Act 1961, Nigerian Deposit Insurance Act 2006, Banks and other establishment Act 1991,
Investment and Securities Act 2007, Company Income Tax Act 2004, Federal Inland
Revenue Services Act 2007. All these give some pointers on preparation of financial
statements in Nigeria. IFRS doesn't acknowledge the presence of those laws and therefore the
accountants got to follow the IFRS absolutely with no dominant provisions from these laws.
Nigerian law makers got to build necessary, amendments to confirm a swish transition to
Financial reporting may be a formal record of the financial activities and position of a
manner and in a way that is straightforward to grasp and it generally includes basic financial
statements, in the midst of a management decision and analysis (KPMG, 2013). The
i. Balance Sheet: Shows the entity’s assets, liabilities and shareholders’ equity as of the
reporting date.
ii. Statement of Comprehensive Income: Shows the results of entity’s operations and
iii. Statement of cash Flows: shows changes in the entity’s cash flows throughout the
reporting period.
iv. Statement of changes in Equity or Equity statement: this reports on the changes in
It is worthy of note that financial reporting pundits are unanimous in their agreement
that financial reporting practice of a country depends on many factors that embrace the legal,
economic, cultural and historical background of a country. It may then be argued that
financial reporting isn't an end in its self; rather, it's supposed to produce information that's
employed in making reasoned decisions among alternative uses of scarce resources in the
conduct of business and economic activities. Therefore, this acknowledges the actual fact that
financial reports exist to satisfy the various information needs of various users like the
The adoption of IFRS round the globe is persistently and rapidly result to
improvement of reporting quality through uniform set standards for financial quality.
Therefore, accounting reporting quality may be a function of the firm’s overall institutional
setting, as well as the legal and social group of the state during which the firm resides
(Adeyemi, 2018) Iyoha (2017) document that accounting reporting quality has magnified
worldwide since the start of the 1990s, and counsel that this might result to factors like
dependent on at least 2 factors; improvement of efficiency relies upon the premise that
reporting quality. For instance, Ademola and Ajao (2019) realize that firms that adopting
IFRS have less earnings management, more timely loss recognition, and more value
connexion for earnings, all of which they interpret as proof of higher accounting reporting
quality. Second, the system of accounting may be a complementary part of the country’s
overall institutional system and it is likewise determined by firm’s incentives for financial
reporting.
2.1.4 Adoption of IFRS and the Earnings of Nigerian Banks for wealth maximization
The Nigerian banking sector performs other vital roles besides providing credit
facilitates and granting loans to her customers. The Nigerian banking sector is a vital sector
of the Nigerian Economy, that carries out its functions effectively and with efficiency in
achieving the economic development of the nation (Sanusi, 2017). However, the industry can
function properly with success once there's a healthy financial structure put in place to ensure
the reliability, comparability and accuracy of financial information offered to all or any
financial report preparers and other stakeholders. The Nigerian Banking sector has step by
step developed over the last number of years, which is as a results of the varied reforms
administrated in the industry in the last number of decades by the regulatory authorities.
Following the 2008 banking sector crisis, the Central Bank of Nigeria planned many
programmes geared toward reforming the Nigeria industry and conjointly to boost the
earnings of financial sector normally. These reforms were geared toward eliminating the
inherent weaknesses in the banking setup, poor internal control system, and improving the
Yahaya et al. 2015 investigated the post adoption of IFRS and value connexion of
accounting information of quoted banks in Nigeria. Using the price model and the return
model, the study found that the EPS magnified in the post adoption than in the pre adoption
periods. The study suggested that investors ought to perceive the IFRS adoption process in
order to avoid overvaluation of the economy once the financial markets is better off. Iorpev
(2019) investigated the qualities of IFRS adopters and non-adopters on the Nigerian securities
market from 2008 to 2011. Using exploratory research design of a sample of 10 banks out of
fifteen quoted banks in Nigeria, the study found that EPS aren't considerably connected with
the adoption of IFRS. The study urged that only specific corporations listed on the NSE ought
to adopt IFRS.
Profitability is the ability of a company to get benefit from all its activities. It
measures management competency in making use of the structural means which helps in
adding value to the business. Profitability is also viewed as a relative term measurable in
terms of profit and its relation with alternative basics which will directly have an effect on the
profit. In line with Ekwe et al (2020), profitability is the variance between the cost of
providing goods or services and the revenue derived from the sale. A firm’s profitability is
seen as vital as traditionalist economists among others believe that profit maximization is the
sole objective of a company. Besides a company earning profit to survive and grow, sustain
its operations and contribute towards social overheads for the welfare of its society, other
stakeholders just like the creditors and shareholders among others are inquisitive about an
organization’s profitability.
Profitability in regard to a bank is extremely vital as banks play the role of negotiator
between the excess and the deficit sides of a society, banks got to build a profit in alternative
to realize the confidence of depositors (whose cash they lend out) thus on recognize if their
deposits are safe and owed. Shareholders can wish to understand if there's reasonable return
on their investment, creditors would wish to establish the earned interest on reimbursement
of their principal amount, government would really like to understand banks performance so
as to collect enough tax for provision of social amenities, society would have an interest in
banks performance so that the bank are able to fulfil their social responsibilities, staff so as to
rest assured of their remunerations etc. profitability, in line with Sanni (2018) may be a
condition where the financial gain generated over a given time surpasses the expenditures
incurred within the same length of time for the solitary purpose of generating income.
Though multifariously, authors have given a special definition, essentially it's regarding
sustaining the power to own excess income over expenses. Profitability is thus vital because
2.1.4.2 Fair Values and the International Financial Reporting Standard (IFRS).
Reporting Standards (IFRS) in the banking system using FVA (IFRS 13), this has been
supported by international organisations like World Bank, International Monetary Fund and
Financial Stability Board (Jayasekara, Perera & Ajward, 2018). This can enhance single high-
quality world accounting standards (World Bank 2017; FSB 2015). Fair value concept in the
instruments activity (IFRS 9 and IFRS 7) in 2010 to interchange IAS thirty-nine (Jayasekara
at al 2018). Nigeria being one among the 126 countries out of profiled a hundred and fifty
countries that have adopted IFRS (IFRS foundation, 2017) incorporated fair value in the
financial statements of banking system since 2012 that replaces the native Generally
Accepted Accounting Standards (GAAP) to boost comparison and modify them to raise fund
(debt and equity) within and outside them. Adoption of IFRS 13 brings quality to financial
statement of banking sector in terms of globalisation and are challenged with inactive market,
skill shortage, government control and weak regulatory environments among others.
Signaling theory is useful in describing behaviour when two (2) parties have access to
completely different information. Therein setting, the ender (communicator) chooses a way to
communicate or signal the information to the opposite party (the receiver), who chooses a
way to interpret the signal. Due to the role of information in structural growth and
gaining momentum in recent years (Connelly, Cerrto, eire &Reutzel, 2019). Under signaling
theory, managers use the accounts to signal their expectations to investors who use
accounting information for decision. Managers who expect a high level of future growth
would signal that via published financial statements. Even managers of corporations with
poor financials would signal positive reporting to retain high rating among investors
(Godfrey, Hodgson, Tarca, Hamilton & Holmes, 2017). The adoption of IFRS provides
chance for corporations in developing countries to present financial statements by making use
of high quality accounting standards. In line with Signaling theory, some IFRS adopters
might send the right signals, whereas others might convey deceptive signals. Daske et al
(2019) found that some corporations adopt IFRS more in name only, whereas other adopters’
Agency theory was propounded by Jensen and Meckling in 1976. They explained that
agency relationship arises when the business owner(s) use another person and saddled such
with the responsibility of managing their business or performing a service on their behalf.
This entails delegation of some decision-making authority to the agent, it always results into
productive economy (Hoitash, Hoitash & Bedard, 2018). The agents in according to Pauloni
(2017) are a unit expected to act in the best interests of the principals. In this study,
management is the agent with the responsibility of delivering high quality earnings that may
absolutely Olaoye, F.O. & Ibukun-Falayi, predict future earnings of Deposit Money Banks in
Nigeria to the principals (stakeholders), which can embrace the shareholders, creditors,
potential investors and others. In additiion, agency relationship exist so as to utilize the
special skills and personal information possessed by the agent and to relax constraints on the
principal’s time but because of rationality in human reasoning, agents tend to pursue a
personal goal which contradict the goal of the principal or that of the business as a whole. In
such scenario, there's need for proper examination and correct monitoring of the agents by the
between the principal and the agents (Herbohn, Ragunathan & Gardsden, 2017). This study is
developed on Agency theory and its hypotheses derive from it. The agency framework needs
that the standard of economic reports ought to mirror in the ability of earnings to guide the
principal in the use of his resources and in ascertaining to what extent, the management is
This study is hinged on the value maximization theory which opines that exist
essentially for two 2 main reasons. That is, to maximise profit in the short run or maximize
shareholder’s wealth in the long run, this suggests that management or drivers of
organizations business should make proper decision which will enhance shareholders’ wealth
in the long run. It's imperative to notice that wealth maximization during this context doesn't
imply increasing shareholders’ wealth alone; but extends to increasing the interest of other
financial claimants particularly the debt and warrant holders. The theory explains that all the
activities of the organization are profit or wealth driven even after they appear benevolent, as
corporate social responsibility or given to charity. It is further explains that the long run
wealth maximization objectives reach the maximization of different financial claimants like
debt and warrant holders. Following from this, it may be argued that Deposit Money Banks
disclosure of IFRS compliant financial statements can lead to maximising firm’s worth. This
assertion provides answers to our main analysis question and objective. This can be any
substantiated by the result derived from the computation of certain ratios (Profit after Tax &
Total Equity) for three selected banks between 2011 and 2013. It absolutely was discovered
that Zenith Banks PAT and ROE grew from N41.3 billion in 2011 to N83.4billion in 2013
and N372billion in 2011 to N472bilion 2013 respectively; Access Bank PAT rise from N5.2
billion in 2011 to N26.2 billion in 2013 and ROE grew from N187billion in 2011 to N245
billion in 2013. Within the same vein GTB Plc PAT and equity grew from N51.7 billion to
N85.5 billion and N234 billion to N329.6 billion in 2011 and 2013 respectively. It’s
necessary to note at this juncture that the value relevance is one amongst the measures
Wealth of Deposit Money Banks in Nigeria. In 2012, the Nigerian government adopted IFRS
due to inadequacies of the Nigeria GAAP and the needs to embrace international best
practices. This study examines the effects of IFRS Adoption on Shareholders' Wealth in
Deposit cash Banks in Nigeria. The study employs longitudinal research design and data were
collected from published financial statements of Deposit Money Banks (DMBs) listed on the
Nigerian Stock Exchange (NSE) for the period of 2008 to 2015. Multivariate Analysis of
regression analysis models was used for the data analysis. The Dividend per Share (DPS),
market price per Share (MVPS), Earnings per Share (EPS) and Return on Equity (ROE)
serves proxies for shareholders' wealth whereas IFRS pre and post-treatments serve as a
categorical variable and inflation as a continuous control variable. The result of the study
shows that IFRS adoption compact considerably on DMBs investors wealth of DPS, on ROE
solely when it has been controlled for inflation. There is, however, no proof on market value
per Share (MVPS) and Earnings per Share within the same period under review even when
control for inflation. The study concludes that IFRS adoption has significant impact on
Money Deposit Banks in Nigeria by Ademola & Ajao (2019). The focus of the study is to
look at the result of International Financial Reporting Standards (IFRS) adoption on the
performance of First bank plc, Guarantee trust bank and Zenith bank plc using some financial
ratios chosed from 3 major classes of financial ratios. The population comprise of twenty-
three industrial banks listed on the Nigerian Stock Exchange (NSE) as at 31 st Dec, 2018.
Three banks were selected supported accessibility of information needed for the
investigation. This study was conducted through the comparison of ratios that were computed
from IFRS based financial statements and Nigerian GAAP based financial statements. The
statistical tool used was regression analysis with the help of statistical package for social
sciences (SPSS) 20.0 version. The findings show that there's vital relation between IFRS
adoption and financial performance with reported coefficient estimates and probability values
ratio and IFRS respectively. Therefore, the study counselled that there ought to be rather
authorities, professional bodies and government before the impact in Nigeria gets worsened
and out of hand. In addition, firms ought to endeavour to use the chance conferred by the
adoption of IFRS to boost their business processes all ramifications in order to aid uniformity
and transparency.
motivation of the study springs from previous studies that relate to the investigation of IFRS
impact on the financial performance of money deposit banks listed on NSE. It examines the
impact of the adoption of the International financial reporting Standards on the financial
performance of money deposit Banks. A Wilcoxon model is explored using pooled data that
fitted with the variables. The results show that IFRS adoption has absolutely wedged some
variables in the finances of money deposit banks, for instance, profitability and growth
and support money deposit banks in the adoption and application of IFRS so as to enhance
their performance. Future analysis study might also determine the precise provisions of IFRS
that are accountable for the positive impact on financial performance measures. Such detailed
information is helpful to standard setters who might need to enhance existing accounting
standards. Further research study ought to extend the sample size and the time horizon of the
Implementation, and Accounting Information: Evidence from Iraqi Banking Sector. The
study explores the result of IFRS on the financial performance of Iraqi commercial banks. It
conjointly investigates the worth significance of financial performance statements using the
Ohlson model, which has been used for the stock value relevancy test in variety of studies.
The study employed a sample of sixty-six listed banks on the Iraq stock market over 3 years
of IFRS pre adoption (2011–2013) and 3 years of IFRS post-adoption (2016–2018), they
discover financial performance components EPS and BVS value relevant to the stock returns.
The findings conjointly indicate that the implementation of IFRS show a major positive result
on the value relevancy of the BVS, whereas the adoption of IFRS doesn't have a major
impact on the value relevancy of the EPS reported by Iraqi banks. Their results indicate that
the value of the bank rises dramatically with increased financial performance reporting.
Additionally, the implementation of IFRS shows a major result on the financial performance
measures and the value relevancy of financial reporting in the Iraqi banking sector. This
paper adds to previous value relevancy literature and IFRS by throwing light-weight on the
banking sector in a developing country that has recently move from applying native
Ayodeji, Nyikaa and Nyikaa (2019) inspected the impact of the reception of
Canada. The examination expressly explored the impact of IFRS on return on resource, return
on value and income per portion of banks in Nigeria and Canada. The study collect data for
the period 2013 to 2017 for five banks each in Nigeria and Canada. The investigation at that
time skint down information with illustrative measurements and relapse study. The
examination uncovered that the impact of IFRS on return on resource was negative and
significant in Nigeria but certain and large in Canada. The investigation also showed that the
impact of the IFRS on value was negative but unimportant in the 2 nations. The examination
also shows that the impact of IFRS reception on procuring per share was negative and
inconsequential for the Nigerian banks but sure and significant in the Canadian banks. Thus,
the investigation presumed that the impact of the IFRS wasn't exceptional in Nigerian banks
This section provides a conceptual frame work for this study based on literature
review. It explains the key variables and relationships among theories and models. The
conceptualization helps to answer the study’s research questions. Hence; the following
conceptual framework will be developed to serve as a road map to analyze the entire study. In
these model variables such as International Financial Reporting Standard (IFRS), will be
represent as the Independent variable for this study. Whereas dependent variables will be
Returns on Equity, Market Value per Share and Earning per share wealth of listed Money
Deposit Bank in Nigeria (Wealth). And this will be representing by Figure 1 below;
Source: construction Own (2022)
CHAPTER THREE
METHODOLOGY
In this chapter focus will be on the type of research design and methodology to be
used to fulfil the aims and objectives of this research study. Section 3.1 discusses the research
design and this will justify the chosen design, section 3.3 to 3.7 describe the target
population, sampling and sampling technique and the sample size, data collection methods,
data analysis and presentation. This chapter will further explain technical procedures in a
manner appropriate for the audience, it achieve this by addressing the research and sample
design used for the study, the data collection and field work conducted for the study and the
analysis done to the collected data.
This study is set out to examine the effect of IFRS adoption and it’s significant on
Wealth of listed Money Deposit Banks in Nigeria, with the extent to which IFRS affect
Return on Equity of listed MDBs in Nigeria and the link between IFRS adoption and Market
Value per Share and Earning per share of listed Money Deposit Banks in Nigeria.
Research design can be seen as the plan and structure of investigation so conceived as to
obtain answers to research questions. It includes an outline of what the investigation will do
from this study, while non-experimental design was used by secondary data sourcing through
the use of financial statements of listed Money Deposit Banks in Nigeria, while Wema Bank
Plc, First Bank Nig. Ltd, Union Bank Plc, United Bank for Africa Plc and Guarantee Trust
Bank Plc will be used as a case study for the period of five (5) years, range from 2007 to
2011 before adoption of IFRS and five (5) years after adoption of IFRS range from 2013 to
2017.
In order to assess the impact of IFRS, this study adopts causation and effect approach using
regression analysis. The study adopts (wealth of Money Deposit Banks in Nigeria), Returns
on Equity, Market Value per Share and Earning per Share of listed Money Deposit Banks in
Nigeria as the dependent variable and IFRS adoption as independent variable, and it will be
used in the ordinary least squares (OLS) regression model. The method has a lot of attractive
qualities or properties. It is noted that, it is best, linear, unbiased and efficient (BLUE). This
means that the method has minimum variances among all class of linear estimators and it is
unbiased in the sense that its estimates of coefficients are true parameters of the population
parameters.
The target population in this study involves all listed Money Deposit Banks in Nigeria
and their published financial statements, population of 33 listed Money Deposit Banks in
The sample size selected was the financial statement of the selected listed Money
Deposit Banks in Nigeria, while Wema Bank Plc, First Bank Nig. Ltd, Union Bank Plc,
United Bank for Africa Plc and Guarantee Trust Bank Plc will be used as a case study for the
period of five (5) years, range from 2007 to 2011 before adoption of IFRS and five (5) years
after adoption of IFRS range from 2013 to 2017, with the view to assess the impact of IFRS
and its significance on Wealth of listed Money Deposit Banks in Nigeria, with the extent to
which IFRS affect Return on Equity of listed Money Deposit Banks in Nigeria and the link
between IFRS adoption and Market Value per Share and Earning per Share of listed Money
The relevant data collected for this research study was through secondary data from
financial statement of selected listed Money Deposit Banks in Nigeria, while Wema Bank
Plc, First Bank Nig. Ltd, Union Bank Plc, United Bank for Africa Plc and Guarantee Trust
Bank Plc will be used as a case study for the period of five (5) years, range from 2007 to
2011 before adoption of IFRS and five (5) years after adoption of IFRS range from 2013 to
2017, with the view to assess the impact of IFRS adoption and its significance on wealth of
listed Money Deposit Banks in Nigeria, with the extent to which IFRS adoption affect Return
on Equity of listed Money Deposit Banks in Nigeria and the link between IFRS adoption and
Market Value per Share and Earning per Share of listed Money Deposit Banks in Nigeria over
those years.
Research instrument used for this research study is existing data of Money Deposit
Banks in Nigeria. And this is secondary data that will be extracted from the financial
statement of Money Deposit Banks in Nigeria, with the view to assess the impact of IFRS
adoption and its significance on wealth of listed Money Deposit Banks in Nigeria, with the
extent to which IFRS adoption affect Return on Equity of listed Money Deposit Banks in
Nigeria and the link between IFRS adoption and Market Value per Share and Earning per
To a large extent, the financial report used for this study met the checklist of
understandable, relevance and answerability, so it is quite reliable for this study In order to
test the validity of the data collected, the published financial report of selected listed Money
Deposit Bank in Nigeria, while Wema Bank Plc, First Bank Nig. Ltd, Union Bank Plc, United
Bank for Africa Plc and Guarantee Trust Bank Plc will be used as a case study for the period
of five (5) years, range from 2007 to 2011 before adoption of IFRS and five (5) years after
The study used simple linear regression by employing ordinary least squares
technique to examine the relationship between the variables for the period under review. The
functional form of a simple linear regression model adopted in this study is given by; Y = f(x)
In accordance with the study objectives, the explicit form of the equation was adopted
Where;
ROE = Returns on Equity (Dependent variable)
e = Error term.
The variables constructed for this model are dependent, independent variables and error term.
For the purpose of this research work, the independent variable was the IFRS adoption while
the dependent variables were Returns on Equity, Market Value per Share and Earning per
CHAPTER FOUR
4.0 Introduction
This chapter presents the analysis and interpretation of data collected for this study.
This study examines the impact of IFRS adoption on the wealth of deposit money banks in
Nigeria. It helps to determine how adopting IFRS contributes to wealth creation by the banks.
The wealth of the banks was measured based on three variables. These are; return on equity
(ROE), the market value per share (MVPS), and earnings per share (EPS). Data for this study
are generated over ten years between 2007 and 2017. 2007 to 2011 represent years before the
adoption of IFRS, while 2013 to 2017 represent years after its adoption. 2012 was omitted
because that is the year the government announced the adoption, and the banks may not fully
comply with the standard due to its new introduction. So a gap of one year was left, which is
assumed to be enough for the banks to comply with the laws fully. More so, five banks are
randomly selected for the study. These banks met the selection criteria: (i) they are quoted on
the Nigerian stock exchange, and (ii) they publish audited financial statements between the
The ROE and EPS are calculated based on the data generated from the annual audited
reports of the banks. This is to ensure the validity of the data, which contributes to the
accredited data bank for financial data analysis. The IFRS was represented by a dichotomous
variable that takes '0' for years before the adoption and '1' for years after the adoption.
Descriptive and inferential statistics were used for the analysis. Descriptive statistics describe
the data, which helps to understand the nature of the data. This guides us in choosing the
appropriate model for the analysis. On the other hand, inferential statistics help to draw
inferences that determine the impact of one variable on the other—this help to achieve the
In this section, the descriptive statistics of the data were presented to show the
characteristics of the data. The results are presented in table 4.1 below. It shows a mean value
of 0.1448 for ROE with a minimum of 0.004, while the maximum is 0.4302. The standard
deviation is 0.0847, which indicates that the data is widely distributed. It has a positive
skewness, indicating that the data have more values on the upper side of the mean than on the
lower side. The p-value of the Jarque statistics is less than 0.05, indicating that the data is not
normally distributed. For MVPS, the mean value is 10.47 with a minimum of 0.93, while its
maximum is 34.4. The standard deviation is 8.104, and the skewness is 1.03, which shows
that the data have a long tail to the right. The p-value of the Jarque-Bera statistics is less than
0.05, which indicates that the data is not normally distributed. The mean value of EPS is
0.9985 with a minimum of 0.0002, while the maximum is 4.87. The standard deviation is
1.31, and the skewness is 1.37, while the p-value of its Jarque-Bera is also less than 0.05.
Observations 50 50 50
Source: Author's Computation, 2022
The chart below shows the average wealth of the banks based on ROE, EPS, and
MVPS on a yearly bases. It shows that the movement of EPS and MVPS significantly varies
over the years, indicating unstable or inconsistent values while the ROE is relatively stable.
The chart also shows a demarcation between the years of non-adoption of IFRS and the years
EPS, and MVPS. The results imply that the performance of the banks is different from each
other over the period. GTB has the highest ROE and MVPS over time, while the first bank
This section presents correlations, which help understand the variables' relationship.
Correlation values range from -1 to +1, indicating the relationship's direction and strength. A
positive coefficient indicates that these two variables have a positive relationship, i.e., they
both move in the same direction. In contrast, a negative coefficient indicates that the
relationship between the two variables is inverse, i.e., they both move in the opposite
direction. A zero coefficient indicates that the two variables have no relationship and a value
close to zero indicates a weak relationship. The results are presented in table 4.2 below. It
shows that the correlations between all the variables are positive, indicating that they all have
a positive relationship.
ROE 1
0.300
MVPS 1
(0.034)
0.197 0.374
EPS 1
(0.171) (0.008)
This section presents the regression analysis, which helps to achieve the study's main
objective, which is to examine the impact of IFRS on the wealth of quoted money deposit
banks in Nigeria. The analysis was divided into three because we have three dependent
variables (ROE, MVPS, EPS) representing the banks' wealth or value. The analysis was
conducted using an OLS regression estimate, and the results are presented in the sub-sections
below.
This section presents the regression results using ROE as the dependent variable. The
results, as shown in table 4.4.1 below, indicate a coefficient value of 0.038 for IFRS, which is
positive and significant since its p-value is 0.024, less than 0.05. This indicates that adopting
IFRS has a significant positive impact on ROE. i.e., IFRS contributes significantly to ROE.
The R2 of the model is 0.496, which indicates that adopting IFRS can explain about 49.6% of
the total variance in ROE. The p-value of the F-statistics is less than 0.05, indicating that the
model is significant.
Weighted Statistics
R-squared 0.496 Mean dependent var 0.183
Adjusted R-squared 0.439 S.D. dependent var 0.121
S.E. of regression 0.072 Sum squared resid 0.226
F-statistic 8.661 Durbin-Watson stat 1.444
Prob (F-statistic) 0.000
This section presents the regression results using MVPS as the dependent variable. The
results are presented in table 4.4.2 below, and it shows a positive coefficient of 0.56 with a
significant value of 0.021, indicating that the IFRS has a significant positive impact on
MVPS. The R2 of the model is 0.775, which indicates that adopting IFRS can predict about
77.5% of the changes in MVPS. More so, the p-value of the F-statistics is less than 0.05,
Weighted Statistics
R-squared 0.775 Mean dependent var 13.91
In this section, the regression analysis on EPS was presented. It helps to determine the
impact of the adoption of IFRS on EPS. The results are presented in Table 4.4.3 below, and it
shows a coefficient value of 0.297 for IFRS with a p-value of 0.045, indicating that its impact
is positive and significant. The R2 is 0.489, indicating that adopting IFRS can predict about
48.9% of the variance in EPS. The p-value of the F-statistics is also less than 0.05, which
Weighted Statistics
R-squared 0.489 Mean dependent var 0.953
Adjusted R-squared 0.431 S.D. dependent var 1.093
S.E. of regression 0.984 Sum squared resid 42.6
F-statistic 8.428 Durbin-Watson stat 1.123
Results from this study show that adopting the IFRS standard impacts quoted
Nigerian banks' wealth. This is shown as it has a positive coefficient from all the analysis
results. The coefficient is also significant, which indicates that IFRS adoption has a
significant impact on the wealth of the banks. This result is similar to Tanko (2012), who
found that firms adopting the IFRS standard tend to show a higher value on different
profitability measures like earning per share EPS, which shows that adopting the IFRS
that adopting IFRS helps companies identify losses quickly, which will help them swiftly
take necessary action to curb further loss and help them lead in value creation. More so, Alu
& Jelil (2017) noted that adopting IFRS contributes to the performance of quoted
fraud and other forms of management sharp practices and help to improve value creation for
the firms.
CHAPTER FIVE
5.0 Introduction
This chapter presents a summary of the study from chapter one to the last chapter. It
also presents the findings from the study in relation to past similar studies. Conclusions are
drawn based on findings and recommendations based on the findings and conclusions from
the study.
5.1 Summary
This study was conducted primarily to focus on the impact of IFRS adoption on the
wealth of listed money deposit banks in Nigeria. It aims to investigate how adopting IFRS
has helped banks increase their wealth and value. Chapter one presents the background of the
study. It includes the statement of the problem, which form the research questions and
objectives of the study. It also presents the significance of the study and how the results will
benefit different stakeholders. Chapter two presents a review of pieces of literature from past
related studies. This helps to know the existing facts and theories established by past authors,
which serve as a framework for this study. This also helps to identify the gap in the literature,
i.e., the untouched areas or areas which have not to gained enough attention from past
studies, which this study set to explore. This form the justification of the study and why this
study is important. Chapter three presents the research methodology, i.e., the method adopted
by this study in achieving its objectives. It discusses the adopted research design, the
population of the study, sources of data, the method of data collection, and the data analysis
techniques. Chapter four presents the analysis and interpretation of the generated data. The
analysis was conducted using descriptive and inferential statistics to understand the nature of
the data and how one impacts the other. The analysis was presented in sections to answer the
5.2 Conclusion
Based on the findings from the study, it is concluded that Nigeria's ROE, MVPS, and
EPS-listed banks change over time. It sometimes records high values, while it is significantly
low in some years. This shows that the values are unstable, and management should devise
means to improve and maintain a high level of value for the banks. More so, the results show
that the banks' values significantly differ from each other. This implies that banks with the
least performance should devise means to increase their value to meet their industrial
average. This can mean adopting strategies that significantly boost their performance and
contribute to their values. The results show that the adoption of IFRS has contributed
significantly to ROE, MVPS, & EPS which means that its adoption has contributed to the
banks' wealth, and the banks should continue to adopt the standard to reap its benefits
continuously.
5.3 Recommendations
Based on the findings and conclusion of the study, the following recommendations
were made;
1. The management of money deposit banks in Nigeria should continue to adopt the IFRS
2. Government and the appropriate authority should enforce strict compliance with the IFRS
enhance accountability and transparency of accounting records which will help to achieve
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