ISSN 2348-1218 (print) International Journal of Interdisciplinary Research and Innovations ISSN 2348-1226 (online) Vol. 9, Issue 3, pp: (48-56), Month: July - September 2021, Available at: www.researchpublish.com
IFRS Adoption and Financial Performance Indicators of Quoted Conglomerates Firms in Nigeria 1
Miebaka Big-Alabo, 2C.O. Ofurum
Department of Accounting, Faculty of Management Sciences, University of PortHarcourt
Abstract: This study empirically investigated the impact of IFRS adoption and financial performance indicators of quoted conglomerates in Nigeria with specific focus on pre-IFRS (2007 to 2011) and Post –IFRS adoption (2012 to 2018). The key performance indicators considered include price earnings ratio, liquidity, leverage and growth in revenue .The study adopted the T-statistics to test the research hypothesis. Findings presented in the above section clearly revealed that price earnings ratio (PER), liquidity (LIQ) and leverage (LEV) showed an increase indicating that IFRS adoption has had a positive impact of the performance of firms among the conglomerate sector of the economy. However, the Paired t-test showed that that the difference in mean values for all variables were statistically insignificant. Hence, we conclude that, even with the adoption of IFRS, the consumer sector performance still did not change. Hence, there is need for regulators to ensure that local policies are introduce to encourage or stimulates the economy further to enable better performance on the part of the firms. Again, management need to consider growth strategy that will result in the improvement in return on invested capital overtime. Lastly, management should consider adopting policy to improve liquidity position especially in the face of rising debt ratio as observed in the leverage variable. Keywords: IFRS Adoption, Financial Performance Indicators, Quoted Conglomerates.
1. INTRODUCTION The debate surrounding performance cannot be overemphasised. A firm needs to be in strong performance standing to be able to survive and compete both in the short-run and long-run periods. The consequences of poor performance could be catastrophic in many areas. It is detrimental in all aspects, from the loss of revenue to inability to finance the daily operation of the firm, liquidity or solvency problem to, in severe cases, liquidation of the firm. In these severe cases, employees lose their jobs, investors lose their investments and the economy at large suffers. The loss of jobs is not limited to direct employees, but the indirect jobs created along the supply chain as a result of the operation of the firms. In the case of conglomerate firms, performance is essentially important because of the role conglomerate firms play in the economy development of Nigeria. This is why studying performance and analysing the impact of adoption of IFRS on the performance of firms cannot be overemphasised. International financial reporting standards have been adopted and well internalised by Nigerian firms by now. The argument advocated the superiority of IFRS compared to the local standards (statement of Accounting standards, SAS) prepared by the defunct Nigerian Accounting Standards Boards (NASB). However, the superior arguments as advocated by proponents of adoption of IFRS were theoretical and an empirical analysis need be undertaken to know what impact adoption have on performance. In other economies around the world, effect of adoption has been negative. In Nigeria, research revolving around adoption of IFRS and financial performance have concentrated efforts on the financial sectors with other authors such as Ibanichuka and Asukwo (2018), Umobong & Ibanichuka (2016) Adelus (2017), Ironkwe and Oglekwu (2016), Asian (2015) focusing on the oil and gas sector, manufacturing sector in addition to the banking sector. However, research on the impact of IFRS adoption on financial performance in the conglomerate sector has been scarce. The dearth of research in this area makes it difficult to ascertain what effect adoption has had on financial performance of conglomerate firms. It should be known that the conglomerate sector is special with its
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