admin/ January 29, 2019/ Journal of Business and Social science/ 0 comments

THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS AND THE EARNINGS QUALITY OF ZENITH BANK NIGERIA PLC

SANNI, Michael Rotimi & ADERETI, Safiriyu Adeboye
Department of Accountancy, The Federal Polytechnic Ilaro, Ogun State, Nigeria
Department of Accounting, Federal University of Technology, Akure, Ondo State, Nigeria.

babasanni2@gmail.com , boyeadereti@yahoo.co.uk

ABSTRACT
The adoption of International Financial Reporting Standards (IFRS) is expected to improve the earnings quality
of firms that adopt them. It is against this background that this study investigated the influence of IFRS on the
earnings quality of Zenith Bank Nigeria Plc. Earnings quality was proxied by Post-IFRS Earning Yield and
Change in Post-IFRS Earning Yield. The study period of 10 years (2007 – 2016) was divided equally into two
periods: Pre-IFRS period (2007 – 2011) and Post-IFRS period (2012-2016). Data sourced from the published
financial statements of the bank and Nigerian Stock Exchange were analysed with STATA, using fractional
regression analysis. The result of the analyses showed that the adoption of IFRS led to a statistically significant
improvement (p = 0.00) in the earnings quality of the bank. Result further showed that Earnings per share and
share prices, used in the calculations of the two variables used as proxies for earnings quality were, contrary to
a priori expectation, negatively correlated (-.51) but not statistically significant (p=0.140). While the findings
are consistent with some previous works, they negate others. The study therefore concluded that the adoption of
IFRS might not have been solely responsible for the improved earnings quality of the bank as other macro and
micro economic factors might have also been responsible.
Keywords: Earning-quality, Earning-Yield, Change- in- Earning-Yield Financial- Reporting-Standards
Earnings- Per- Share

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