Impact of International Financial Reporting Standards (IFRS) and financial performance in the banking industry
Chapter One
OBJECTIVE OF THE STUDY
The main objective of the study is to examine the effect of IFRS adoption on the financial performance of money banks in Nigeria with emphasis on zenith bank, but to aid the completion of the study, the researcher intends to achieve the following specific objective;
- To ascertain the effect of IFRS adoption on the quality of financial reporting in zenith banks
- To examine if the financial statement of the banks prepared in line with IFRS shows a true and fair view of the banks financial position.
- To ascertain if there is any significant relationship between IFRS adoption and banks profitability in Nigeria
- To examine the impact of IFRS adoption on the usefulness of financial statement reporting to global investors in Nigeria banking sector.
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
INTRODUCTION
IFRS is an all inclusive motivation to upgrade a brought together limit in monetary data announcing framework crosswise over universal regions with the attention on producing speedier energy for improvement financially. They are standards – based measures by the IASB. This single lot of worldwide financial measures has been under improvement for more than three decades since the IASC was set up in 1973. Today the suite of benchmarks contains International Accounting Standard (IAS) which was created by IASC and the IFRS , issued by IASB. Theory of Benchmark. This paper is tied down on value expansion theory of Jensen (2001). This theory holds that the essential destinations and motivation behind an existing firm is to take advantage of investors riches in the long run. As indicated by .Jensen (2001), these speculations clarify that all the authoritative exercises whether magnanimous or something else, are essentially looking to make benefit. This hypothesis additionally holds that budgetary inquirers like obligation and warrant holders on the long run, will be augmentation of different partners (Abdul-Baki et al, 2014). The specialist therefore noticed the basic purpose behind displaying a company’s financial report in the instructed arrangement regarding IFRS is to boost its long haul value, accomplish straightforwardness, responsibility and budget reports similarity. Observational Studies of Okoye and Akenbor (2014) opined that it is convenient for Nigeria to embrace a international standard on the grounds that numerous Nigerian organizations have securities of outside organizations. Subsequently, IFRS will result to a superior choice about the progression of financial capital. Various specialists have additionally distinguished the advantage IFRS is considered to deliver. As per Mary, Okoye and Adediran (2013) the presentation and appropriation of IFRS in Nigeria will make and support open doors for a bigger money change for firm and upturn the centralization of economies of scale. Taiwo and Adejare (2014) recommended from their investigation that IFRS will upgrade money related execution and nature of bookkeeping records. It will likewise upgrade business proficiency, help assets distribution and execution arranging in organizations. This is pair with Ocansey and Enahoro (2014) that the selection of IFRS in Nigeria needs a decent corporate administration framework and new set of ability and skill. Obviously, if governments , institutional condition, administrative bodies, governing body, review panels, partners and every other gathering can assume their jobs fittingly, IFRS will finish in an improved data quality particularly for banks. Irokwe and Oglekwu (2016) did an investigation on IFRS and corporate execution of recorded organizations in Nigeria. Individual meeting and poll techniques were embraced in the investigation as the significant methods for essential information gathering. Information gathered were broke down utilizing both illustrative strategies, for example, tables, frequencies and rate s and inferential measurements of chi-square and ANOVA individually. The investigation held that relationship between the appropriation of IFRS and the monetary execution is unequivocally positive due to cost decrease of an association. IFRS reception improves business profitability and effectiveness for more prominent and powerful business result. The reception of IFRS spares worldwide partnerships the cost of setting up various arrangement of records for different eco national units and offices. Shehu (2015), explored on IFRS reception and income quality in recorded store cash banks in Nigeria. He examines company’s properties from the points of view of structure, observing, execution components also, the nature of income of recorded store cash banks in Nigeria. The investigation received connection look into structure with adjusted board information of 14 banks as test of the investigation, utilizing various relapse as an apparatus of examination. The outcome uncovers that organizations highlights, for example, bank development, Leverage, liquidity, benefit, bank measure impact income nature of recorded store cash banks in Nigeria after the reception of IFRS, while the pre period demonstrates that the chosen organizations traits have no observable effect on income quality. It is in this way maintained the selection of IFRS is convenient and practical. Abata (2015) contemplated the effect of IFRS selection on monetary detailing practice in the Nigeria banking division. The particular goals of the examination was to find out if the subjective contrasts in the explanation of money related position arranged by Nigerian recorded banks under IFRS and NGAAP are factually critical or not.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine impact of IFRS and financial performance in the banking industry. IFRS, Abuja forms the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain impact of ifrs and financial performance in the banking industry. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing impact of ifrs and financial performance in the banking industry
Summary
This study was on impact of IFRS and financial performance in the banking industry. Three objectives were raised which included; To ascertain the effect of IFRS adoption on the quality of financial reporting in zenith banks, to examine if the financial statement of the banks prepared in line with IFRS shows a true and fair view of the banks financial position, to ascertain if there is any significant relationship between IFRS adoption and banks profitability in Nigeria and to examine the impact of IFRS adoption on the usefulness of financial statement reporting to global investors in Nigeria banking sector. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from IFRS, Abuja. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Based on the findings and subsequent recommendation of this study, it was concluded that the adoption of IFRS is a right step in the right direction. Although there are many issues and challenges facing the implementation, the benefits outweigh the challenge. With adoption, Nigeria companies will produce a more credible financial statements that will not only be uniformed but also provide a basis for better interpretation. The invariably will boost investors confidence and attract cross border financial transactions which is the basis for economic growth.
Recommendation
From the findings of this study, the researcher hereby recommends the following:
- Steps to ensure a successful adoption and implementation of IFRS in Nigeria.
- Government and the regulators should ensure that there is availability of training facilities and materials for professional accountants on the concept of IFRS and issues relating to its implementation and conversion.
- Compliance with IFRS timetable should be mandatory and failure should be marched with appropriate sanctions.
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