ADOPTIION OF IFRS AND FINANCIAL REPORTING QUALITY

IN NIGERIA

IKPONMWONBA FAVOUR

MAT NO: LHP/ ACC/ 1920100

DEPARTMENT OF ACCOUNTANCY LIGHTHOUSE POLYTECHNIC

EDO STATE, EVBUOBANOSA

NOVEMBER, 2021
 ADOPTIION OF IFRS AND FINANCIAL REPORTING QUALITY

IN NIGERIA

IKPONMWONBA FAVOUR

MAT NO: LHP/ ACC/ 1920100

A PROJECT WORK SUBMITTED TO THE DEPARTMENT OF ACCOUNTANCY IN

PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

NATIONAL DIPLOMA (ND) FOR ACCOUNTANCY LIGHTHOUSE POLYTECHNIC

NOVEMBER, 2021

CERTIFICATION
i
This research work has been approved in fulfillment of the requirement for the award of National

Diploma (ND) in accountancy.

_______________________ __________________

Mr. Ehigie .A. Humphrey Date

Supervisor

_______________________ __________________

Mr. Ehigie .A. Humphrey Date

Head of Department

______________________________ __________________

Ikponmwonba Favour Date

DECLARATION

ii
1. Ikponmwonba Favour declares that:

i. This research project is based on the study undertaken by me in the department of

Accountancy, school of business studies, Lighthouse Polytechnic, Evbuobanosa, Edo

State. Under the supervision of Mr. Ehigie .A. Humphrey of the department of

Accountancy, school of business studies, Lighthouse Polytechnic, Evbuobanosa, Edo

State.

ii. This work has not been submitted for the award of any degree elsewhere.

iii. All ideas and views are product of my personal research and where the views of

others have been expressed, they have been duly encouraged.

iv. I shall be totally, wholly and fully responsible for any liability that may flow from

this study, if any.

DEDICATION

iii
This project is solely dedicated to God Almighty for whose love, care and provisions is the major

source of the completion of this research work, and to my ever caring parents Mrs. Funmi

Ikponmwonba and Mr. Friday Ikponmwonba.

ACKNOWLEGEMENT

iv
First of all, my praise, worship and heart of gratitude goes to God Almighty that cannot be

limited by circumstances throughout my programme in the Polytechnic. He provided all I

needed for a successful studies.

Thanks and gratitude goes to my project supervisor Mr. Ehigie .A. Humphrey who also happens

to be my HOD, for directions and giudians throughout my project work .

I also appreciate the effort of my amiable parents Mrs. Funmi Ikponmwonba and Mr. Friday

Ikponmwonba for all the support offered to me during my stay in the Polytechnic without which

i would not have been able to write and complete this project.

And also I want thank my lecturers for their teaching,encouragement and support in ensuring i

passed through this Diploma.

Lastly, I appreciate all my friends and course mate for their continuous encouragement.

TABLE OF CONTENTS

v
Tittle Page i
Certification ii
Declaration iii

Dedication iv

Acknowledgement v

Table of Content vi

Abstract viii

CHAPTER ONE: INTRODUCTION

1.1 Background to the Study 1

1.2 Statement of Research Problem 2

1.3 Research Questions 3

1.4 Objective of the Study 3

1.5 Research Hypothesis 3

1.6 Scope of the Study 4

1.7 Significance of the Study 4

1.8 Definition of Terms 5

CHAPTER TWO: LITERATURE REVIEW

2.0 Introduction 6

2.1 Conceptual Framework 6

2.1.1 International Financial Reporting Standards 6

2.1.2 Financial Reporting Quality 7

2.3 Empirical Review 14

2.4 Theoretical Framework 17

vi
2.4.1 Stakeholder Theory 17

2.4.2 Agency Theory 18

2.4.3 Institutional Theory 20

CHAPTER THREE: RESEARCH METHOD AND DESIGN

3.0 Research Methodology 21

3.1 Introduction 21
3.2 Research Design 21
3.3 Population of the Study 21
3.4 Sample and Sampling Technique 21
3.5 Sources of Data 22
3.6 Method of Data Collection 22
3.7 Analytical Technique 22
3.8 Model Specification 22
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION

4.1 Descriptive Statistics 24

4.2 Correlation Coefficient Matrix 25
4.3 Regression Output 26
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS

5.0 Introduction 28

5.1 Summary of Study 28

5.2 Recommendation 28

5.3 Conclusion 28

REFERENCES 30
APPENDICES I 33
APPENDIX II 38

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 ABSTRACT

IFRSs Adoption has been the latest development in the field of accounting. The essence of it is to
develop a set of accounting standards that will ensure preparation of a quality set of financial
statement. This area has received researchers’ attention globally of which Nigeria is not
excluded. Although there are numerous existing studies on IFRS adoption and quality of
financial statement, this study wishes to contribute to existing studies by viewing the relationship
between IFRS adoption and quality of financial statement from the perspective of all Financial
members and professional of the Institute of Chartered Accountant of Nigeria. IFRS adoption is
used as independent variable while timely preparation of financial statement, Transparency,
Understandability, Comparability and reliability of financial statements are used as dependent
variables to proxy quality of financial statement. The study employed descriptive survey design.
The population of the Study consists of all financial members and professionals of the Institute of
Chartered Accountants of Nigeria. Data for the study were sourced through primary source by
well structured questionnaires of 50 distributed equally among each member of the population
out of which the 50 were fully filled and returned by the respondents. The collected data were
analysed by descriptive statistics, the result deposits that there is positive and negative
significant relationship between IFRS adoption and financial reporting quality. Based on the
findings, it is strongly recommended that companies should adopt full set of IFRSs and
ensure that there are adequate training programs to familiarize the accountants with the
IFRS adoption. It is also recommended that accounting regulatory body like Financial
Reporting Council of Nigeria (FRCN) should ensure that there is proper monitoring of
companies so as to ensure that they adopt full set of IFRS in the preparation of their
Financial Statements.

viii
 CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The growth of foreign capital markets and accessibility of quick global communication have

placed on accounting the need to create useful and comparable information across territorial

border (Madawaki, 2012). In view of promoting a system of unified accounting system globally

brought about the development of a global set of accounting standards that will be adopted by the

different countries of the world. As a result of the move towards the convergence of accounting

practice, the International Accounting Standard Board (IASB) was formed and tasked to create a

high quality set of standards that would verify accounting practices across borders. As conducted

by Yurisandi and Puspitusari 2015, the creation of the International Financial Reporting Standard

(IFRS). The IFRS is said to achieve the following: promote transparency, enhance comparison of

financial reports across territories, reduce cost of capital due to increase in investors confidence,

enhance cross border investment among others (Francis, Huang & Khurana 2012).

The financial reports are said to enhance cross border information if they are of high quality i.e

they are transparent and comparable to investors across borders and this will lead to improved

cross-border investment (Codia & Ogeidu, 2013). This exactly is one of the many benefits been

fronted for the adoption of IFRS across the globe. In Nigeria, June 3 rd 2011, the Nigeria

Accounting Standard Board (NASB) was renamed the financial reporting council of Nigeria as

the regulatory body charged with overseeing the adoption and implementation of International

Financial Reporting Standards (IFRS) (Kenneth 2012). This implies that the standard-setting is

no more done locally in Nigeria; rather the overseeing of adoption and implementation of

1
International Financial Reporting Standard (IFRS) is what is obtainable. The IFRS was adopted

in Nigeria in the year 2012 by all companies listed in the Nigeria Stock Exchange and was

required to compulsorily adopt these standards in the preparation of their annual reports and

accounts. And another important role of its adoption is the easy understandability of the financial

report as the statement is prepared through a single set of standards which make the financial

statement globally to be speaking the same language of accounting. (Alwood, Verleun & Ahmed

2011).

1. 2. Statement of Research Problem

Despite all the immense benefits of adopting and implementing IFRS such as reduced cost of

doing business across borders via reduction in the need for complementary information,

comparability of information, enhancement in evaluation and analysis by users of financial

statements, reduction in uncertainties as well as Capital cost, it’s implementation is however not

without challenges, especially in a developing country like Nigeria (Adekoya, 2011: Ahmed,

2011) Adoption of IFRS in Nigeria is faced with challenges which will entail significant costs

and will have far reaching challenges on a wide variety of stakeholders in the financial reporting

process: including financial statement prepares, investors, analysts, auditors, regulators and other

partakers of financial reporting process. These stakeholders are faced with a number of

implementations.

Aip and Ustundagi (2009) and Martins (2011) all conducted studies on the challenges of

adopting IFRS in Nigeria and discovered that despite the adoption of IFRS in some countries.

This does not mean that the quality of financial reports in those countries did not significantly

improve. In the adoption of IFRS on the transparency and comparability of financial report. To

2
this end, this study is carried out to examine if the adoption of IFRS has improved the quality of

financial report in Nigeria.

1. 3 Research Questions

In relation to the statement of research problem, the following research questions are stated thus:

i. To what extent does comparability significantly relate to financial reporting quality.

ii. To what extent does transparency significantly relate to financial reporting quality.

iii. To what extent does timeliness significantly relate to financial reporting quality.

iv. To what extent does reliability significantly relate to financial reporting quality.

v. To what extent does understandability significantly relate to financial reporting quality.

1. 4 Objective of the Study

The broad objective of the study is to determine the relationship between the adoption of

International Financial Reporting Standard and Financial Reporting Quality in Nigeria, while the

specify objectives are to:

i. investigate whether comparability significantly relates to financial reporting quality;

ii. evaluate whether transparency significantly relates to financial reporting quality;

iii. determine whether timeliness significantly relates to financial reporting quality;

iv. ascertain whether reliability significantly relates to financial reporting quality; and

v. determine whether understandability significantly relates to financial reporting quality.

1.5 Research Hypotheses

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 The following null hypotheses are formulated for this study:

oH
: O1: Comparability has a negative relationship with financial reporting quality.
C
HO2: C 2 Transparency has a negative relationship with financial reporting quality.

HO3: Timeliness has a negative relationship with financial reporting quality.

C
HO:4: Reliability has a negative relationship with financial reporting quality.
C
HO
:U5: Understandability has a negative relationship with financial reporting quality.
C
1.6. Scope of Study

The primary objective of the study is to examine the adoption of International Financial

Reporting Standard and Financial Reporting Quality in Nigeria. The scope of study covers

accounting firms, accounting practitioners and academicians in Nigeria.

1.7 Significance of the Study

The primary objective of the study is to examine the ability of the Federal government to

identify the challenges facing the adoption of international financial reporting standards (IFRS)

and how to address these challenges in order to produce a high quality financial reports for

manufacturing companies or firms that would be comparable, reliable, accessible understandable

and dependable in nature across the globe matters a lot. The result of this study will not only

serves as a road map to the adoption process of the international financial reporting standards but

would also serve as a good reference point for future researchers who would want to acquire

more knowledge on how the adoption of international financial reporting standards (IFRS) was

4
adopted in Nigeria. Thus, the study will also assist the federal government of Nigeria in

designing good policy framework in financial reporting by financial reporting council in Nigeria.

1.8 Definition of Terms

IFRS: International Financial Reporting Standard (IFRS) is a codification of accounting

standards, interpretations and framework in the preparation and presentation of the financial

statements which is developed and issued by the IASB.

Financial Reporting Quality: are means of communicating organization performance to its

different stakeholders. This different stakeholders decision are based on financial

statements/financial report that is prepared and presented by management. To assist the

stakeholders to make rational decision, the financial statement must be of quality standard so that

the stakeholders are not misled by manipulating financial statement.

Comparability: Comparability is the concept of allowing users to compare financial statements

to determine the financial position, cashflow and performance of entity.

Timeliness: Timeliness illustrate that information must be available to decision makers before

losing it’s powerful and good influences. Timelines is evaluated using the period between the

year end and the issuing of the auditor’s report.

Transparency: Transparency is the extent to which financial report reveals an entity underline

economics in a way that readily understandable by those using financial report.

5
Understandability: understandability is the concept that financial information should be

presented so that a reader can easily comprehend it.

Reliability: reliability refers to whether financial information can be verified and used

consistently by investors and creditors with the same results.

CHAPTER TWO

LITERATURE REVIEW

2.0 Introduction

This chapter discusses the relevant literature and the chapter is subdivided as follows: section

one explain the conceptual framework, while section two describes the empirical studies and

section three concludes the chapter with the theoretical framework.

2.1 Conceptual Framework

This section discusses the dependent and independent variables. They are discussed below:

2.1.1. International Financial Reporting Standards

The practice of accounting all over the world is guided by sets of guidelines principles or rules.

These rules and guidelines are compiled into accounting standards upon which the accounting

practices are based. They are statements of principle that discusses the accounting treatments and

disclosure of a particular item or group of items (Adebimpo & Ekwere, 2015).

International financial reporting standards (IFRS) is a body prescriptive rules and guidelines with

global reach and appeal which provide direction and guidelines on how business enterprises in a

6
globalized world could achieve the goal of proper record keeping, transparency,

understandability, comparability and enhancing public confidence in financial reporting

(Tendoloo & Vanstraelen, 2005). Maclas and Muino (2011) suggested the problem of financial

reporting quality in the accounting information presented according to generally accepted

accounting principles was more successful in the predictability dimension than information

resented according to the International Financial Reporting Standards (IFRS) system.

Therefore, the International Financial Reporting Standards (IFRS) is said to bridge the regional

gaps experienced in the national accounting and financial reporting often seen in the general

accounting practice (GAAP) was characterized with regional sectional discrepancies which

impinged on free cross border financial reporting. According to Anthony and Young (2010)

generally accepted accounting practice (GAAP) used initially for accounting and financial

reporting gives way to differences in businesses communication and reporting of financial

information across different countries and firms around the world.

2.1.2 Financial Reporting Quality

One of the main aim or purpose of adoption of International financial reporting standard is to

provide a very high quality of financial reporting standards across the globe such that investors,

shareholders and other users of accounting information can have enough confidence and trust on

the kind of financial statement prepared, presented and reported on the entities or forms. Firms

therefore has their primary objectives of obligations to report to their financial activities or

operations as to provide high quality financial information needed by uses of financial

information for economic decision making only (IASB, 2008). Providing a high quality of

financial report is very necessary because, it positively influences capital market, credit and

7
similar resource allocation decision that can enhance the over-all market efficiency (IASB, 2006,

IASB, 2008).

Financial reporting quality can be referred to as the precision with which financial reporting

presents information about a firm’s operations (Biddle, Hilary, & Verdi, 2009). This process at

times is beclouded with opportunistic reporting by manipulating accounting numbers of firm

performance, against shareholders’ value, where they get false information (Klein, 2002). This is

possible in a system where managers have the incentive to manage earnings using abnormal

discretionary accruals, or any fraudulent manipulation. Fortunately, corporate governance

mechanisms works to ensure quality financial reporting (Cohen, Krishnamoorthy, & Wright,

2004).

Financial reporting of higher quality is assumed to be fundamental to capital markets, so,

information disclosure determines the efficiency with which resources are allocated (Bekiris &

Doukakis, 2011). Users of financial statements are interested in the quality of earnings as well as

the quality of reporting (information disclosed), because such information influences their

decision-making. And, several corporate governance factors play out to affect FRQ such as

board quality, audit committee, external and internal auditors and managerial impact (Johl, 2013;

Lin 2011; Suryana, 2018).

Comparability and Financial Reporting Quality.

Comparability means that the information should enable users to identify and understand

similarities in, and differences among, items (IASB, 2010). Information is comparable if it can

be compared with similar information about other entities and with similar information about the

same entity for another period or date. Yurisandi and Puspitasari (2015) found that comparability

8
of financial reports increased after IFRS adoption at 1% level of significance. Barth, Landsman

and Lang (2011) found that the value relevance of earnings and equity book value is more

comparable among non-U.S. firms after the application of the International Accounting

Standards than when local accounting standards were used. Beuselinck, Joos and Van der

Meulen (2007) found that the earnings comparability is not affected by mandatory IFRS

adoption. In line with Braam and Beest (2013), six constructs were used to evaluate

comparability.

Comparability which is the quality of information that enables users to identify similarities in

and differences between two sets of economic phenomena (IASB, 2008). In other words, similar

situations should be presented the same, while different situations should be presented

differently.

Comparability is measured using six items that focus on consistency. Four items refer to the

consistency in use of the same accounting policies and procedures from period to period within a

company (Jonas & Blanchet, 2000; Vincent & Schipper, 2003; Beuselinck & Manigart, 2007;

Cole, Branson, & Breesh, 2007). Two items are used to measure the comparability in a single

period across companies (Cleary, 1999; Jonas & Blanchet, 2000; Cole et al., 2007; Beuselick &

Manigart, 2007; IASB, 2008).

Comparability includes consistency which refers to the use of the same accounting policies and

procedures, either from period to period within an entity or in a single period across entities

(IASB, 2008). According to the ED, companies should strive for comparability by means of

consistency. Jonas and Blanchet (2000) operationalize consistency by referring to coping with

change and uncertainty. New information, rules or regulation generally cause companies to

change their estimates, judgements, and accounting policies. For instance, if new information is

9
available which encourages a revision of the expected lifetime of a certain asset, this may result

in a change of estimate. In addition, many EU-listed companies changed from local GAAP to

IFRS in 2005, as a result of new rules and legislation. In terms of consistency it is important that

these companies explain how these changes affect previous results. Comparability is a quality

factor in addressing usability of financial information (Cohen, 2004). If a company changes its

estimates, judgements, or accounting policies it may adjust previous years’ earnings figures in

order to visualize the impact of the change on previous results.

Additionally, since consistency refers to using the same accounting procedures every year, this

year’s figures should be comparable to previous years’ figures. When a company provides an

overview in which they compare the results of different years, even when no changes in

estimates, judgements, or accounting policies occurred, this will improve the comparability of

financial reporting information. A difference exists between comparability and uniformity.

Srivastava (2014) finds that temporal changes in accounting quality measures such as value

relevance, matching and earning volatility are largely driven by economic substantial influence

in innate factors on earnings properties. However, the ED explicitly states that comparability is

not similar to uniformity. If companies pursuit uniformity, not only similar things look alike but

also different things look alike. This is not the purpose of the IASB and FASB, since uniformity

could lead to surface comparability (Schipper, 2003). Comparability not only refers to the

consistency of the use of accounting

procedures by a single company, it also refers to comparability between different companies

(IASB, 2008). When assessing the comparability of annual reports of different companies, the

accounting policies used, the structure of the annual report, and the explanation of transactions

10
and other events are of special importance (Jonas & Blanchet, 2000). In addition, ratios and

index numbers can be useful when comparing companies’ performance.

Reliability and Financial Reporting Quality.

On the other hand, reliability, according to the Financial Accounting Standard Board (FASB)is a

statement of financial accounting concept, which means that, the quality of information which

assures that the information should be reasonably free from error and bias and faithfully

represents what it purports to present. (Cheung, Evans & Wright, 2010). Reliability is the degree

to which measures are free from error and therefore yield consistent results. Faithfully

representation also applies to a measure when similar financial information is obtained overtime

across different entities and countries.

The term reliability in relation to financial reporting is an important qualitative attribute of

accounting information. This term is vital and may influence whether the information is useful to

those who read financial statement or otherwise. The reliability of audited corporate annual

financial report is considered to be crucial and an essential factor affecting the usefulness of

information made available to various users (Cheung, Evans & Wright, 2010). The accounting

profession has recognized that the reliability of reports is a significant characteristic of financial

accounting information and for regulatory and professional agencies. Reliability concept is a

quality of information that assures decision makers that the information represented in the

financial records captures the actual conditions and events of the reporting entity. In Contrast,

the IASB Framework states that information has the quality of reliability when it is free from

material error and bias and can be depended upon by users to represent faithfully which it either

purports to represent or could reasonably be expected to represent. In the IASB Framework five

11
characteristics are included under the concept of reliability: faithful representation, substance

over form, neutrality, prudence and completeness. (Engel, Gordon & Hayes, 2002).

Timeliness and Financial Reporting Quality.

In extant literature, the timeliness of financial reporting has been defined from different perspectives.

McGee (2007) defined it as the period between the company’s year-end and the date that the

financial report was released for public view. Karim, Ahmed and Islam (2006) remarked that the

timeliness of financial reports include audit delay, which is the number of days between the balance

sheet date and the date the external auditor’s report was signed; financial statement issue delay,

which is the number of days between the balance sheet date and the date of declaring the notice of

the annual general meeting (AGM); and the AGM delay, which is the number of days between the

date of the financial year end and the AGM (Efobi & Okogbuo, 2015).

The timeliness of financial reports varies across countries. In Russian energy sector, McGee (2007)

observed that it takes between 81 to 181 days (average of 148.7 days) to release their financial

reports. On the average, Chinese companies require an average of 92 days, with a minimum of 24

days and a maximum of 181 days (McGee & Yuan, 2008). Islam (2006) noticed a longer delay time

for listed Bangladesh companies, who require an average of 192 days. Timeliness is considered as

one of the qualitative characteristics of useful information by the American Accounting Association,

where the conceptual framework of financial reporting of accounting standard setters worldwide such

as the International Accounting Standards Board (IASB) recognizes timeliness as one of the

characteristics which determines the relevance of accounting information. Users need timely

information to enable them make a promptly review to decide whether to continue or stop their

investment in a company. Delays in disclosing timely information on the preparers’ part would result

in greater market inefficiency (Ismail & Chandler, 2004).

Understandability and Financial Reporting Quality.

12
This means financial reports must be clearly and concisely classified, characterised and

presented as well as minimisation of technical jargons and unnecessary complexity to enable

user easily assimilate the contents. (Beest, Braam & Boelens 2009). Yurisandi and Puspitasari

(2015) found that understandability of financial reports increased after IFRS adoption at 1%

level of significance. Five constructs were applied in examining understandability.

Understandability measures financial reports presentation (in terms of organisation, graphs and

tables, size of glossary, mission and strategy, researcher’s of understandability, and the use of

technical jargons).

The first enhancing qualitative characteristic, understandability, will increase when information

is classified, characterized, and presented clearly and concisely. Understandability is referred to,

when the quality of information enables users to comprehend their meaning (IASB, 2008).

Understandability is measured using five items that emphasize the transparency and clearness of

the information presented in annual reports (Jonas & Blanchet, 2000; Iu & Clowes, 2004;

Courtis, 2005; IASB, 2006).

First, classified and characterized information refers to how well-organized the information in

the annual report is presented. If the annual report is well-organized it is easier to understand

where to search for specific information (Jonas & Blanchet, 2000). Furthermore, disclosure

information, and in particular the notes to the balance sheet and income statement, may be

valuable in terms of explaining and providing more insight into earnings figures (Beretta &

Bozzolan, 2004). Especially narrative explanations help to increase the understandability of

information (IASB, 2006; Iu & Clowes, 2004).

Additionally, the presence of tabular or graphic formats may improve understandability by

clarifying relationships and ensuring conciseness (IASB, 2006; Jonas & Blanchet, 2000).

13
Moreover, if the preparer of the annual report combines words and sentences that are easy to

understand, the reader will be more likely to understand the content as well (Courtis, 2005). If

technical jargon is unavoidable, for instance industry related jargon, an explanation in a glossary

may increase the understandability of the information.

Transparency and Financial Reporting Quality.

The objective of financial statement is to provide information about the financial position,

performance and charges in financial position of an entity. The transparency of financial

statement is secure through full disclosure and by providing fair presentation of useful

information necessary for making economic decision to a wide range of users (Madhani, 2009).

In the content of public disclosure, financial statement should be easy to interpret. The adoption

of internally accepted accounting standards is necessary measured to facilitate transparency and

proper interpretation of financial statements.

The transparency of financial statements is secure though full disclosure and by providing fair

presentation of useful information necessary for marking economic decision to a wide range of

users. In the context of public disclosure, financial statements should be easy to interpret. While

more information is better than less, the provision of information is costly (Bushman, 2001).

Therefore, the net benefits of providing more transparency should be carefully evaluated.

The adoption of internationally accepted accounting standards is necessary measured to facilitate

transparency and proper interpretation of financial statements.

According to the international standards, financial statements are normally prepared assuming

that the enterprise will continue to operate as a going concern and that events are recorded on as

accrual basis. The effects to transactions and other events are recognized when they occur. Then

they are reported in the financial statements of the periods to which they relate. Qualitative

14
characteristics represent those attributes that make the information provided in financial

statements useful to its users. If comprehensive useful information is absent, even managers may

neither be aware of the true financial condition of their enterprise nor may other key players be

misled Bushman & Smith, 2013). The application of the principal qualitative characteristics and

of appropriate accounting normally results in financial statements that give a true and fair

presentation.

2.3 Empirical review

Iatridis (2010) in United Kingdom using Ordinary Least Squares regression technique investigated

the earnings management potential by examining company accounting measures reported under

UK-GAAP and IFRS. The study found out that, implementation of IFRS reduces the scope of

earnings management, and also lead to more value relevant accounting measures. And

recommended that,

less information asymmetry and earnings manipulation would lead to the disclosure of higher

quality accounting information, and would therefore assist investors in making informed and

unbiased judgements.

Liu and O’Farrell (2011) using descriptive statistics in analyzing their research variables,

suggested in their study on IFRS and earnings management in China that, earnings management

had decreased in China since 2007 under IFRS, implying that, there are immediate benefits for

regulators, filers, information consumers, the accounting profession and other stakeholders.

Uyar (2013) conducted a study on the impact of switching standard on accounting quality in

Turkey using earnings management (discretionary accruals, income smoothing and small

15
positive earnings), timely loss recognition, and value relevance metrics. The study’s findings

indicated that, the quality of accounting improved with the market becoming more active.

Andu, Solomon Ibrahim (2019) in Nigeria using regression model and carried out study on the

impact of IFRS Adoption on the quality of financial reports in Nigeria. The results shows that

IFRS adoption improve transparency and comparability of financial statement. It was

recommended that IFRS should be reviewed to allow more disclosure in the financial reports.

Okpala, (2012) in Nigeria using quantitative survey model carried out a study on 123

respondents consisting of preparers of financial statements of listed companies and investment

analysts in Nigeria. His result in respect to cross border investment shows a perceived positive

influence of IFRS adoption on Nigeria FDI inflow and economic growth. He recommended that

more country and region specific studies should be conducted in other to analyzed the unique

variable across country in relation to IFRS adoption benefit.

Ames (2013) in South Africa conducted a study on IFRS adoption and accounting quality, he

found that IFRS adoption does not significantly improve earnings management and also that the

value relevance of major balance sheet components changes post adoption.

Maigoshi (2014) using multiple regression model carried out study on the Impact of Mandatory

Adoption of International Financial Reporting Standard on Accounting Quality in Nigeria found

that earnings management has reduced with the adoption of IFRS as reporting standard in

Nigeria and large loss recognitions have also increased in the post adoption period; thus showing

the clearer and true picture of organizational performance and recommended that research should

be conducted to analyzed why IFRS improves the accounting quality based on standard by

standard, not the whole package as whole.

16
Okoye, Okoye and Ezejiofor (2014) in Nigeria using descriptive survey model conducted a

study on Impact of the IFRS Adoption on Stock Market Movement in Nigerian Corporate

Organization. It was observed that the adoption of IFRS in Nigeria will enhance credible

financial statements that will also provide a basis for the strength of a corporate entity in capital

market hence is a welcome development in Nigerian economy. And recommended that co-

operate entities in Nigeria should adapt to the IFRS to ensure its sustainability.

Onipe, Musa and Isah (2015) in Nigeria using regression model examine the effects of the

adoption of the International Financial Reporting Standards on the financial statements quality of

banks. The results show that international financial reporting standards (IFRS) adoption has

positively impacted some variables in the financial statement of banks, for example, profitability

and growth potential. The study therefore concludes that the banks experienced a quality

financial statement under the period of adoption of international financial reporting standard than

any other period. Financial statement of banks was qualitative than ever.

Nwakaeze (2010) in Nigeria using spearman correlation model analyzed the financial reporting

quality for accountability in public companies. The study sought to correlate the noncompliance

with the financial standards and governance code in 20 selected public quoted companies on the

Nigeria Stock Exchange (NSE) in the Delta State of Nigeria. Primary data were generated with

the aid of questionnaire from the population of 20 public companies quoted on Nigeria Stock

Exchange (NSE). Data collected were analysed using percentages and chi-square. The study

revealed that there is an accurate financial reporting quality of accounts of public companies

during the adoption of international financial reporting standards which resulted that prospective

investors and the general public should have confidence on the financial period of international

financial reporting standards (IFRS).

17
2.4 Theoretical framework

This section discusses the following;

2.4.1 Stakeholders Theory

The theory upon which this study is based is stakeholders’ theory. The justification for this is

that since there are more than one or two parties that affect and are affected by the operation of a

company, then considering their interest is worthwhile. More so, the IFRS has been developed to

improve the reporting quality of the financial statement to different stakeholders such as

shareholders, investors, government, lenders etc. Stakeholder theory was postulated by Freeman

in 1984. The principle of stakeholder theory was gradually dragged into management theory

since the 80s. Freeman, argued that corporate bodies have a wide coverage of accountability than

the parochial representation of agency theory. Wheeler Colbert and Freeman (2003), support this

argument by saying that stakeholder’s theory is a product of sociology and organizational

disciplines that identify a good array of other stakeholders in an organization. Stakeholder theory

postulated that a stakeholder is ‘any group or individual who can affect or is affected by the

achievement of the organization’s objectives.

Stakeholder theory was postulated by Freeman in 1984. The principle of stakeholder theory was

gradually dragged into management theory since the 80s. Freeman, (1984), argued that corporate

bodies have a wide coverage of accountability than the parochial representation of agency

theory. Wheeler Colbert and Freeman (2003), support this argument by saying that

stakeholder’s theory is a product of sociology and organizational disciplines that identify a good

array of other stakeholders in an organization.

Stakeholder theory postulated that a stakeholder is ‘any group or individual who can affect or is

affected by the achievement of the organization’s objectives. In other words, whoever is affected

18
 by failure or success of the enterprise is a stakeholder. Unlike the agency theory, stakeholder

theory demonstrated that there are chains of parties who are affected by the management

decisions such as suppliers, employees and business partners.

2.4.2 Agency Theory

The agency theory has been one of the most important theoretical paradigms in accounting

literature during the last twenty (20) years (Lambert, 2001). Healy & Palepu (2001), corporate

financial reports is one critical part for the proper functioning of an efficient capital market.

Firms provide information through regulated quality financial reports. Financial reporting quality

is a key practice of corporate financial reporting. However, there are multiple factors

surrounding the quality of financial reporting. Beyer, Cohen, Iys & Waltner (2010) argued that

the function of corporate information in an environment is the dynamic interaction of the

consequence of information asymmetries and agency problems between investors, firms and

other users of financial information. Thus, in a capital markets setting, the corporate information

environment is shaped by the decision to adopt a uniform international financial reporting

standards.

There are many relationships between the various organisation resources providers and how

accounting is used to manage the functioning of these relationships. Examples include the

relationships between the equity owners and the managers, or between the managers and the firm’s

debt financier.

These relationships involve the delegation of decision-making from the principal to the agent, which

is referred to as an agency relationship (Deegan and Unerman, 2006).

In order to make personal gains, agents may use confidential information at the expense of the

principals or owners. It is the incentive problems that are at the heart of agency theory, as

Lambert (2001, p.5) says:

19
Agency theory models are constructed based on the philosophy that it is important to examine

incentive problems and their „resolution‟ in an economic setting, in which the potential incentive

problem actually exists. Typical reasons for conflict of interest include (1) effort aversion by the

agent, (2) the agent can divert resources for his private consumption or use, (3) differential time

horizons, e.g. the agent is less concerned about the future period effects of his current period

actions, because he does not expect to be with the firm, or the agent is concerned about how his

actions will affect others‟ assessments of his skill, which will affect compensation in the future,

or (4) differential risk aversion on the part of the agent.

A company’s overall voluntary disclosure policy may be monitored and determined by corporate

governance mechanisms (Kelton and Yang, 2008). This results in managers voluntarily discloses

more information in submission to monitoring. Consistent with the predictions of agency theory,

this study extends this notion by examining the relationship between corporate governance

factors and voluntary disclosure via the Internet.

2.4.3 Institutional Theory

One of the dominant theoretical perspectives in organisation theory is institutional theory.

Accounting researchers are increasingly using it to study the accounting practices in the

organisations (Deegan and Unerman, 2006). This theory is a thinking way about formal

organisation structures and how it develops from the nature of the historically grounded social

processes (Dillard et al., 2004). A predominant factor underlying the rapid growth of institutional

theory is its wide range of applicability in the literature of organisation theory.

As for voluntary disclosure, normative isomorphic pressures could arise through the influences

of both formal and informal groups, from the less formal group to which accountants are

attached, for example, the development of working and cultural practices within their workplace

20
(Deegan and Unerman, 2006). These could produce accountants‟ views in favour of or against

certain reporting practices, such as collective views on the necessity or desirability of providing

investors with Internet financial information, in order to comply with Bursa Malaysia’s Investor

Relations Put Into Practice (2006) and Best Practices in Corporate Disclosure (2004).

CHAPTER THREE

3. 0 Research Methodology

3. 1 Introduction.

This chapter provide a discussion of the research method and procedures that where applied in

this study. Specifically, it discusses the research design, population of the study, sample and

sampling techniques, sources of data, methods of data collection and methods of data analysis.

3.2 Research Design

21
This study adopts a descriptive survey design. The descriptive survey design was employed

because it attempted to express the opinions of the financial members and professionals of the

institute of accountants in Nigeria. Survey design is employed when information gathered from a

sample of relevant population who are familiar with the ideas needed for a purpose.

3.3 Population of the Study

The population of the study consists of all financial members and professionals of the Institute of

Chartered Accountants of Nigeria. A population of fifty (50) member will be considered in this

study .

3.4 Sample and Sampling Technique

A sample size of fifty (50) randomly selected financial members and professionals of the

Chartered Accountants of Nigeria was made. This number represents the characteristic of the

population.

3. 5 Sources of Data

Data used for this research study was primary data collected through copies of questionnaires

branded adoption of international financial reporting standard and financial reporting quality in

Nigeria. Fifty (50) copies of questionnaire were administered to the selected sample.

3. 6. Method of Data Collection

This study relies on primary source for data through the administration of questionnaire. The

questionnaire has three parts. The first part was designed to introduce the researcher to the

respondent. The second part was designed to obtain information from them and bio-data of the

22
respondent. The third part was designed to obtain information from respondents on the adoption

of IFRS and financial reporting quality in Nigeria.

3.7 Analytical Techniques

Data obtained from the study will be analyzed using descriptive survey design and the multiple

regression model was used to test for the relationship and degree of association between the

independent variable (IFRS Adoption) and the dependent variable financial reporting quality.

3.8 Model Specification

The Model for this study is adopted from the study of Cohen (2004) and Cheung, Evans and

Wright (2010). However, the study introduced reliability and understandability in addition to the

variables employed in the above studies.

FREQ (COMP, TRAN, TIME, RELI, UDST)

FREQ = β o + β 1COMP + β 2TRAN + β 3TIME + β 4RELI+ β 5UNDS

Where;

FREQ = Financial Reporting Quality

β o = Intercept where QFR is Zero
β 1 – β 5 = Parameters (Slope Coefficient)
COMP = Comparability
TRAN = Transparency
TIME = Timeliness
RELI = Reliability
UNDS= Understandability

23
 CHAPTER FOUR

DATA ANALYSIS AND INTERPRETATION

This chapter discusses the analysis and interpretation data and further divided into the following

sections, section 4.0 explains the descriptive statistic, while section 4.1 talks about the

correlation coefficient matrix, immediately followed by section 4.2 which discusses the

regression output, meanwhile, section 4.3 concludes with the discussion of findings and data

interpretation.

4.0 Descriptive Statistic

The descriptive statistic is described in the table below.

Table 4.1: Descriptive statistics

FREQ COMP TRAN TIME RELI UNDS

Mean 12.61404 14.01754 14.26316 15.45614 13.10526 17.03509
Median 12.00000 13.00000 15.00000 16.00000 12.00000 17.00000
Maximum 25.00000 24.00000 25.00000 24.00000 25.00000 25.00000
Minimum 5.000000 6.000000 5.000000 5.000000 5.000000 5.000000
Std. Dev. 5.579793 5.100740 5.591851 5.116745 5.547471 5.650426
Skewness 0.894985 0.273182 0.151417 -0.428430 0.641584 -0.369120
Kurtosis 2.695957 2.178641 2.014329 2.679532 2.312657 2.315195

Jarque-
Bera 7.829037 2.311218 2.525231 1.987659 5.032526 2.408146
Probability 0.019950 0.314866 0.282913 0.370157 0.080761 0.299970

Sum 719.0000 799.0000 813.0000 881.0000 747.0000 971.0000

Sum Sq.
Dev. 1743.509 1456.982 1751.053 1466.140 1723.368 1787.930

Observatio
ns 47 4'7 47 47 47 47

Source: Researcher’s Computation using Eview 8

The descriptive statistics outcome above shows that financial reporting quality (FREQ),

Comparability(COMP),Transparency(TRAN),Timeliness(TIME),Reliability(RELI),Understanda

24
bilty (UNDS) variables have a mean value of 12.61404,14.01754,14.26316,15.45614,13.10526

and17.03509 while the median values are 12.00000,13.00000,15.00000,16.00000,12.00000 and

17.00000, furthermore, the standard deviation values are 5.579793,5.100740,5.591851,

5.116745,5.547471 and 5.650426respectively. However, on the average, Timeliness(TIME)

variable has a maximum mean value of 15.45641, while comparability(COMP) variable has a

minimum mean value of 14.01754, more so, understandability(UNDS) has a maximum median

value of 17.00000, meanwhile,financial reporting quality(FREQ) variable has a minimum median

value of12.00000.Furthermore, transperancy(TRAN), therefore, has a maximum standard

deviation value of 1751.053 while timeliness(TIME) variable has a minimum standard deviation

value of 1466.140. Meanwhile, all the variables are positively skewed except timeliness and

understandability that is negatively skewed while the kurtosis shows a maximum value of

2.695957 and a minimum value of 2.679532 anda maximum value of 2.695957 and a minimun

value of2.315195 respectively.Lastly, the variables show a maximum jarque-bera value of

7.829037and a minimum value of 1.987659 and 2.408146 respectively

4.1 Correlation Coefficient Matrix

The correlation coefficient matrix is explained in the table below.

Table 4.2: Correlation Coefficient Matrix

FREQ COMP TRAN TIME RELI UNDS

FREQ 1.000000
COMP 0.037888 1.000000
TRAN 0.259140 0.259028 1.000000
TIME -0.335851 0.071529 0.167361 1.000000
RELI 0.105754 0.130567 -0.060201 0.002682 1.000000
UNDS -0.040909 -0.100394 -0.089594 -0.020328 0.349667 1.000000

Source: Researcher’s Computation using Eview 8

25
The correlation coefficient matrix shows the association that exist between the explanatory

variables and the dependent variables. However, on the average, the result indicates that at

0.037888 financial reporting quality (FREQ)assocites with comparability(COMP), while at

0.259140 financial reporting quality(FREQ)associates with transparency(TRAN), furthermore,

finanacial reporting quality(FREQ)associates with timeliness(TIME), reliability(RELI),and

understandability(UNDS) at -0.335851,0.105754 and -0.040909 respectively. However, on the

average, all the independent variables have better association within themselves.

Regression Output

The result of the regression is shown in the table below.

Table 4.3: Regression Output

Dependent Variable: FREQ

Variable Coefficient t-Statistic Prob.

C 14.36449 3.742653 0.0005

COMP -0.056394 -0.398387 0.6920
TRAN 0.339806 2.644606 0.0108
TIME -0.426625 -3.154103 0.0027
RELI 0.163024 1.218635 0.2286
UNDS -0.079198 -0.606770 0.5467

R-squared 0.238108
Adjusted R-squared 0.163413
S.E. of regression 5.103566
Sum squared resid 1328.366
Log likelihood -170.6161
F-statistic 3.187723
Prob(F-statistic) 0.014019
Durbin-watson
statistic 2.245300

Source: Researcher’s Computation using Eview 8

26
The regression output above shows an R-squared of 0.238108, which indicates that the

explanatory variables have explained the dependent variables a 23%, while the adjusted R-

squared of 0.163413 indicates that the explanatory and predictability power of the model is

approximately 16%. However, the comparability(COMP), with a coefficient of -0.056394 has a

negative relationship with financial reporting quality(FREQ) while, transparency(TRAN) with a

coefficient of 0.339806 has a positive relationship with financial reporting quality(FREQ), more

so, timeliness(TIME) with a coefficient of -0.426625 has a negative relationship with financial

reporting quality(FREQ), reliability(RELI)with a coefficient of 0.163024 has a positive

relationship with financial reporting quality(FREQ) and understandability(UNDS) with a

coefficient of -0.079198 has a negative relationship with financial reporting quality(FREQ).The

model has Durbin Watson statistics of 2.245300 which indicates that there is no absence of

multicollinearity.

4.4 Discussion of findings and data interpretation

financial reporting quality and comparability

Comparability(COMP) has a coefficient of -0.056394 which indicates that it has a negative

relationship with financial reprting quality(FREQ).However, this means that an increase in

comparability(COMP) results in a decrease infinancial reporting quality. Comparability has a t-

statistic value of -0.398387 with a p-value of 0.6920 at a confidence interval of ≤ 0.05. This

indicates that, the null hypothesis stated below will be rejected, while the alternate hypothesis

will be accepted.

Rejected hypothesis:

Ho1; comparability has no significant relationship with financial reporting quality

27
Transparancy and financial reporting quality

Transparency(TRAN) has a coefficient of 0.339806 which indicates that it has a positive

relationship with financial reporting quality(FREQ) However, this means that an increase in

transperancy results in an increase in financial reporting quality(FREQ). Transparency(TRAN)

has a t-statistic value of 2.644606 with a p-value of 0.0108 This indicates that, the null

hypothesis stated below will be rejected, while the alternate hypothesis will be accepted.

Rejected hypothesis:

Ho2; Transparency has no significant relationship with financial reporting quality.

Timeliness and financial reporting quality

Timeliness (TIME)has a coefficient of -0.426625 which indicates that it has a negative

relationship with financial reporting quality(FREQ).However, this means that an increase in

timeliness(TIME)results in a decrease in financial reporting quality(FREQ. Timeliness(TIME)

has a t-statistic value of -3.154103 with a p-value of 0.0027. This indicates that, the null

hypothesis stated below will be accepted, while the alternate hypothesis will be rejected.

Rejected hypothesis:

Ho1; Timeliness has no significant relationship with financial reporting quality

Reliability and financial reporting quality

Reliability(RELI) has a coefficient of 0.163024 which indicates that it has a positive relationship

with finamcial reporting quality(FREQ). However, this means that an increase in reliability

results in an increase financial reporting quality(FREQ).Reliability has a t-statistic value of

1.218635 with a p-value of 0.2282. This indicates that, the null hypothesis stated below will be

rejected, while the alternate hypothesis will be accepted.

Rejected hypothesis:
28
Ho2; Reliability has no significant relationship with financial reporting quality

Understandability and financial reporting quality

Understandability has a coefficient of -0.079198 which indicates that it has a negative

relationship with financial reporting quality (FREQ). However, this means that an increase in

undrestandability results in a decrease in financial reporting quality (FREQ) understandability

has a t-statistic value of -0.606770 with a p-value of 0.5467.This indicates that, the null

hypothesis stated below will be rejected, while the alternate hypothesis will be accepted.

Rejected hypothesis:

Ho1; understandability has no significant relationship with financial reporting quality.

29
 CHAPTER FIVE

SUMMARY OF FINDINGS, RECOMMENDATIONS AND CONCLUSION

5.0 INTRODUCTION

This chapter is sub-divide into the following sections. section 5.1, discuss the summary of
findings, section 5.2, talks about the recommendation and lastly section 5.3, concludes the
chapter with the conclusion

5.1 Summary of the study

Summary of the study is as follows;

i.Comparability was found negatively associated with financial reporting quality, this
shows that an increase in comparability brings a decrease in financial reporting quality.
ii.Transparency has a positive relationship with financial reporting quality, this means
that an increase in transparency brings about an increase in financial reporting quality.
iii.Timeliness has a negative relationship with financial reporting quality, this indicates
that an increase in timeliness brings about a decrease in financial reporting quality.
iv.Reliability has a positive relationship with financial reporting quality, which means an
increase in reliability brings an increase in financial reporting quality.
v.Understandability is negatively related to financial reporting quality, this indicates that
an increase in understandability brings about decrease in financial reporting quality.

5.2 Recommendation

i. Financial reports should be more transparent in order to reduce investment risk.

ii. Firms should increase timely reports to enable users make quick decision.
iii. Financial statement should be more reliable to make investors more confident in
investments.
iv. Financial reports in companies should be comparable with other countries financial
statement.
v. Financial report should be presented in an organized manner to enable the users
understand the report.

5.3 Conclusion

The conclusion of the study are discussed below;

30
 i. The study discovered that an increase in comparability will result in the decrease in
financial reporting quality. However the null hypothesis stated will be rejected, while the
alternative hypothesis will be accepted.

ii. The study shown that an increase in transparency brings about an increase in financial
reporting quality. The null hypothesis will be accepted while the alternate hypothesis will
be rejected.

iii. The study found that an increase in timeliness results in decrease in financial reporting
quality, this implies that the null hypothesis stated will be rejected, while the alternative
hypothesis will be accepted.

iv. The study found that an increase in reliability brings about an increase in financial
reporting quality, this means that the null hypothesis will be accepted, while the alternative
hypothesis will be rejected

v. The study discovered that an increase in understandability results in decrease of financial

reporting quality, this means that the null hypothesis will be rejected while the alternative
will be accepted.

31
REFERENCE

Adetula, D. T., Nwobu, O., & Owolabi, F. (2014). International financial reporting standards and

foreign direct investment in Nigeria. International Journal of Commerce, Business and

Management, III(3), 446-449.

Adebimpe O. U & Ekwere R. E(20 15). IFRS Adoption and Value Relevance

Statements of Nigerian Listed Banks. International Journal of Finance and Accounting.

Ames, D. (2013). IFRS adoption and accounting quality: The case of South Africa. Journal of

Applied Economics and Business Research JAEBR 3(3), 154-165.

Bushman, R. M., & Piotroski, J. D. (2006). Financial reporting incentives for conservative

accounting: The influence of legal and political institutions. Journal of Accounting &

Economics 42 (1/2).

Bushman, R., Piotroski, J. and Smith, A. (2004), “What determines corporate transparency?”,
Journal of Accounting. Research, Vol. 42 No. 2, pp. 207-252.

Barth, M., Landsman, W.R. & Lang, M. (2008).International accounting standards and

accounting quality. Journal of Accounting - Research, (46), 467- 498.

Barth, M., Landsman, W. & Lang, M. (2007).International Accounting Standards and

Accounting Quality. Journal of Accounting Research, 46,467-728.

Bushman, R., Piotroski, J. (2006). Financial reporting incentives for conservative accounting:

the influence of legal and political institutions, Journal of Accounting Economics, 42,

107-148.

Cohen, J., Krishnamoorthy, G. and Wright, A. (2004), “The corporate governance mosaic and
financial reporting quality”, Journal of Accounting Literature, Vol. 23, pp. 87-152.

Freeman, R. E. (2003): Response: Divergent Stakeholder Theory. Academy of Management

Review, 24(2), 233-23.

32
IASB (2014). IFRS for Banks and Other Financial Institutions. Available from

http://www.iaseminars.com/courses/l 3001_ifrs-for-banks-and-other-financial-

.institutions-2-days [Accessed November 15 2014].

Johl, S.K., Subramaniam, N. and Mat Zain, M. (2012), “Audit committee and CEO ethnicity and
audit fees: some Malaysian evidence”, The International Journal of Accounting, Vol. 47 No. 3,
pp. 302-332.

Latridis, G. (2010). International Financial Reporting Standard and Financial Statement

Information, International Review of Financial Analysis, 19, 193-204.

Madawaki, A. (2012). Adoption of international financial reporting standards in International

Accounting Standards Board (2009), IFRS for SMEs. www.Iasb.org/current

projects/IASB Projects/Small+and+ medium+ sized+entities. Assessed 20/1 1/2017, 1-27

Okpala, K. E. (2012). Adoption of IFRS and the financial stateents effect: the perceived

implications on FDI and Nigeria economy. Australian Journal Of Business and

Management Research, II(5), 76-83.

Okpala K. E. (2012). Adoption of IFRS and financial statements effects: The perceived

implications on FDI and Nigeria economy. Austr. J. Bus. Mnage. 2(5).

Yu, G. (2010). Account standards and international portfolio holdings: Analysis of cross-border

holdings following mandatory adoption of IFRS. Unpublished PhD Thesis. Michigan,

USA.

Yu, G. (2010). Account standards and international portfolio holdings: Analysis of cro ss-border

holdings following mandatory adoption of IFRS. Unpublished PhD Thesis. Michigan,

USA.

33
 APPENDIX I

Department of Accountancy,

Lighthouse Polytechnic,

Evbuobanosa,

Edo State.

Dear Sir/Madam,

REQUEST TO FILL ATTACHED QUESTIONNAIRE

I am an undergraduate student of the Department of Accountancy, School of Business Studies,

Lighthouse Polytechnic, Evbuobanosa, Edo State.

As part of the requirement of my National Diploma (ND) research work at Lighthouse

Polytechnic, I am conducting a survey study titled Adoption of International Financial Reporting

Standard and Financial Reporting Quality in Nigeria. I will appreciate if you could complete the

following questions and any information obtained in connection with the study that may be

identified with you will remain confidential.

Thanks for your co-operation.

Yours faithfully,

Ikponmwonba Favour

34
 QUESTIONNAIRE

PART A

BIO-DATA

Please tick the most appropriate response

Gender: (a) Male { } (b) Female { }

What is your group?

(a) 20 – 29 { } (c) 40 – 49 { } (e) 60 above { }
(b) 30 – 39 { } (d) 50 – 59 { }

What is your highest qualification?

(a) Diploma { } (d) Post graduate Degree { }
(b) B.SC { } (e) Doctoral Degree { }
(c) HND { }

Marital Status:
(a) Single { } (b) Married { } (c) Divorced

Nationality: _________________

PART B

Strongly Agreed (SA) Agreed (A) Neutral (N) Disagreed (D) Strongly Disagree (SD)

Comparability has a negative relationship with (SA) (A) (N) (D) (SD)
Financial Reporting Quality

The adoption of IFRS has brought about

comparability of financial information of different
countries financial statement.

The adoption of IFRS has brought about good and

easy accounting treatment than under SAS.

35
The adoption of IFRS has improve the quality of
financial statements prepared by different
countries across the globe

The adoption of IFRS provides better quality

financial information to shareholders,
stakeholders and other users of financial
information than the period of GAAP

The adoption of IFRS enables management and

auditors to exercise more professional
judgements.
Reliability has a negative relationship with (SA) (A) (N) (D) (SD)
Financial Reporting Quality
The adoption of IFRS has brought about reliable
financial information from different countries
financial statements.
Investors, shareholder, stakeholders and other
users of
financial statements will be confidence on their
investments as a result of the adoption of IFRS.
The adoption of IFRS has brought about financial
information that is free from errors, bias and
capable to yield consistent results.
The adoption of IFRS has enables other countries
to be confident of transaction in the capital market
Reliability ensures that all transaction, events and
business activities presented in the financial
statement is reliable.
Understandability has a negative relationship (SA) (A) (N) (D) (SD)
with Financial Reporting Quality

Adoption of IFRS has improved financial report

presented in an organised manner

Adoption of IFRS prevent users not to be mislead

by an organization.

Graphs, picture and tables enhances the

understandability of presented information.

Adoption of IFRS has improved clear and

understandable financial statement

36
Adoption of IFRS improves presentation of
information to be concised and clear.

Transparency has a negative relationship with (SA) (A) (N) (D) (SD)
Financial Reporting Quality

IFRS based financial statements enable investors

to make certain investment decision.

Transparency moves analysis easier and lower

risk when investing in stock

Transparency enables investors to monitor the

governance and behavior of a company.

Transparency in financial statement makes

financial report to be easily understood.

The transparency of financial statements is secure

through full disclosure and by providing fair
presentation of useful information to a wide range
to users.
Timeliness has a negative relationship with (SA) (A) (N) (D) (SD)
Financial Reporting Quality

The adoption of IFRS help user of financial

information from basing their decision on
outdated information.
The adoption of IFRS on timeliness enables users
to quickly take action.

Timing decision gives management an

opportunity to influence shareholder attitude

Timing reporting is more important to small

shareholders than large shareholders

Timeliness enhances co-operate image, reputation

and stakeholder creditability towards firm.

37
 APPENDIX II

Dependent Variable: FREQ

Method: Least Squares
Date: 11/09/21 Time: 05:04
Sample: 1 57
Included observations: 57

Variable Coefficient Std. Error t-Statistic Prob.

C 14.36449 3.838051 3.742653 0.0005

COMP -0.056394 0.141556 -0.398387 0.6920
TRAN 0.339806 0.128490 2.644606 0.0108
TIME -0.426625 0.135260 -3.154103 0.0027
RELI 0.163024 0.133776 1.218635 0.2286
UNDS -0.079198 0.130525 -0.606770 0.5467

R-squared 0.238108 Mean dependent var 12.61404

Adjusted R-squared 0.163413 S.D. dependent var 5.579793
S.E. of regression 5.103566 Akaike info criterion 6.197057
Sum squared resid 1328.366 Schwarz criterion 6.412115
Log likelihood -170.6161 Hannan-Quinn criter. 6.280636
F-statistic 3.187723 Durbin-Watson stat 2.245300
Prob(F-statistic) 0.014019

38
39