Adoption of International Financial Reporting Standards and Financial Performance of Quoted Firms in the Brewery Industry in Nigeria
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Date
2017
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Ibadan Planning Journal, A Publication of Department of Urban and Regional Planning, Faculty of the Social Sciences
Abstract
International Financial Accounting Standards (IFRS) become mandatory in Nigeria in 2012. This paper evaluated the adoption of IFRS on the financial performance of Nigerian quoted brewery firms. Data were sourced from published financial statements of two leading firms that control 92% of brewery market on profitability ratios proxy with Return on Assets (ROA) and Return on Equity (ROE) for eight year period (2008-2015). Paired sample t-test statistics was used to analyse the fours year pre- -IFRS adoption period (2008-2011) and four years post-IFRS adoption period (2012-2014). The results of the analysis showed that ROA reduced significantly by 0.18$75 after the adoption of IFRS (p= -0.0000), ROE also reduced significantly by 0.2300 (p = 6010). While the findings contradict some existing works, they confirm others. The reduced profitability cannot solely be attributed to adoption of FRS as profitability gradually reduced during the pre-IFRS adoption period. The harsh economic challenges faced by the country in the last few years can as well be responsible.