Economic Consequences of International Financial Reporting Standards (IFRS) Adoption: Evidence from a Developing Country

Abstract

Drawing on extant literature in accounting and financial economics, this study sought to analyze the economic consequences of the adoption of International Financial Reporting Standards (IFRS) by Nigeria through an examination of the major obstacles, benefits and attitudes towards its adoption. As an exploratory study, we drew a sample from the population of Nigerian academics and practitioners who are familiar with the phenomenon of interest. We examined three research questions on the perceptions of Nigerian academics and practitioners about IFRS adoption in Nigeria. The hypotheses were tested using frequency analysis, descriptive statistics, Kruskal-Wallis (K-W) and Chi-square tests. Our findings identified (i) lack of education, understanding and experience by preparers of financial reports with the use of IFRS; and (ii) lack of coverage of IFRS in financial accounting/auditing textbooks as the major obstacles towards its adoption in Nigeria. The results further revealed that: (1) effective IFRS adoption would be valuable to preparers, users, auditors, analysts, and standard setters; and (2) a proper plan to convert all Nigerian companies to IFRS would require training for management, auditors, and investors, along with the pipeline incorporation of IFRS education into accounting curriculum. The policy implication of the study’s findings is the urgent need to integrate IFRS into the accounting curriculum in Nigeria’s higher education system. It also calls for financial regulators and professional accountancy bodies to update their IFRS knowledge in order to maintain their professional competence.

Keywords: Accounting Standards, International Financial Reporting Standards (IFRS), Economic Consequences, Developing Country, Politics, Lobbying, Nigeria.