Adoption of International Financial Reporting Standards and Financial Performance of Listed Manufacturing Firms in Nigeria

Abstract

This study reviewed the literature on the effect of International Financial Reporting Standards (IFRS) adoption on financial performance  of listed manufacturing firms in Nigeria. Forty-five journal articles on the subject published between 2012 and 2021 were analyzed. The  study employed a narrative literature review. The review focused on determining whether there wre any significant differences between  the financial performance measurements of listed manufacturing firms operating in Nigeria that were prepared using IFRS compliant  financial statements and local Generally Accepted Accounting Principles (GAAP). Second, to determine whether financial performance  indicators developed using IFRS-compliantfinancial statements exhibit superior performance than those developed using local GAAP. The  Studies reviewed employed secondary data, which were sourced from the annual report of companies listed on the Nigerian  Exchange Group, and the data were analyzed using panel regression analysis. According to the analysis of the literature, IFRS financial  ratios are more accurate performance indicators than local GAAP financial ratios. Further investigation indicated that there were no  notable discrepancies between the financial performance indicators (financial ratios) reported by listed manufacturing firms operating in  Nigeria under local GAAP and IFRScompliant financial statements. The study concluded that a company's financial performance (return  on capital employed) improves in direct proportion to how closely it complies with IFRS disclosure guidelines. The study recommended  that to sustain the positive effects of compulsory and voluntary financial performance disclosure, manufacturing firms should be   concerned with the disclosure of important information at every point in time.