A STUDY ON THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS AND EARNINGS MANAGEMENT IN QUOTED MANUFACTURING COMPANIES IN NIGERIA

ABSTRACT: This study examined the impact of the adoption of the International Financial Reporting Standards (IFRS) on earnings management in quoted manufacturing companies in Nigeria. Published Financial statements prepared under the Nigerian Statements of Accounting Standards (SAS) and the restated financial statements using IFRS guidelines for 20 quoted companies were used for the study. Discretionary accruals were employed as earnings management variable, while, leverage, cash flow, growth, return on assets (ROA), size and loss were performance proxies. The t -test statistic was used to test the impact of the adoption of IFRS on earnings management, while, multiple regression was conducted to examine the relationship between earnings management and performance. Multi-collinearity tests conducted revealed that the correlation among the variables were not strong enough to distort the result of the multiple regression. The results showed that the decrease in earnings management after the adoption of the IFRS was not statistically significant. The results also revealed that the relationship between earnings management and financial performance of manufacturing companies in Nigeria is significant before and after the adoption of the IFRS. The study unveiled the fact that accounting standards on their own do not improve quality of financial reports. It was recommended that there should be increased education of managers on IFRS guidelines and adoption.