EXPLORING THE IMPACT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ON EARNINGS MANAGEMENT

EXPLORING THE IMPACT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS ON EARNINGS MANAGEMENT

ABSTRACT

This study relies on data from 19 listed companies in Nigeria for the period 2004- 2014 to examine the impact of International Financial Reporting Standards adoption on the earnings management. In addition, I investigate the impact of big four auditor type and firm Size on Earnings Management. The study adopts the Generalized Method of Moments with extensive reliance on secondary data from the financial statement of quoted company’s annual report. The research focuses on nonfinancial firms since financial institutions have a different method of determining Earnings Management. Secondary data sourced from financial statements of quoted companies retrieved from the Nigeria Stock Exchange and websites of the sampled companies for the study. The study makes use of the two-step generalized method of moments to examine how the explanatory variables (IFRS, firm size, audit firm type and control variables) impact on earnings management using discretionary accruals measure. The study finding indicates the existence of negative significant relationship between IFRS, firm size  and earnings management while auditor  type affect earnings management positively. The recommendation is that there is the need for companies to consider an increase in the application  of IFRS in all areas of financial reports and for standard setters to reduce the level of discretion or flexibility in applying the standards. Again companies must ensure that the auditors‟ they engage are credible and have a track record of delivering reports that show the actual state of affairs of a company. Finally, Financial Reporting Council and Regulators like the Security Exchange Commissions should have a stiffer penalty for companies caught engaging in the act of earnings management.

Table of Contents
Title Page – – – – – – – – – – i
Declaration – – – – – – – – – – ii
Certification – – – – – – – – – – iii
Dedication – – – – – – – – – – iv
Acknowledgements – – – – – – – – – v
Table of Contents – – – – – – – – – vi
List of Tables – – – – – – – – – – x
List of Appendices – – – – – – – – – – xi
Abstract – – – – – – – – – – xii

 

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study – – – – – – – – 1
1.2 Statement of the Problem- – – – – – – – 3
1.3 Research Questions- – – – – – – – – 5
1.4 Objectives of the Study- – – – – – – – – 6
1.5 Research Hypotheses- – – – – – – – – 6
1.6 Scope of the Study- – – – – – – – – 7
1.7 Significance of the Study- – – – – – – – 7

1.8 Limitations of the Study- – – – – – – – 8

CHAPTER TWO
LITERATURE REVIEW AND THEORETICAL FRAMEWORK
2.1 Introduction- – – – – – – – – – 9
2.2 General review
2.3 Review of related article
2.4 Review of Empirical Studies – 13
2.5 Theoretical Framework- – – – – – – – 18
2.6.1 Expectation Disconfirmation Theory- – – – – – – 19

 

CHAPTER THREE
METHODOLOGY
3.1 Introduction- – – – – – – – – – 23
3.2 Research Design- – – – – – – – – 23
3.3 Population of the Study- – – – – – – – – 23
3.4 Sample Size and Sampling Technique- – – – – – – 23
3.5 Source and Methods of Data Collection- – – – – – 25
3.6 Measurement of Variables- – – – – – – – 26
3.7 Techniques of Data Analysis- – – – – – – – 26
3.8 Justification for Technique of Data Analysis- – – – – – 26
3.9 Research Model- – – – – – – – – – 27

CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1 Introduction- – – – – – – – – – 28
4.2 Response Rate – – – – – – – – – 28
4.3 Data Screening and Preparation- – – – – – – 29
4.3.1 Analysis of Missing Values- – – – – – – – 29
4.3.2 Analysis of Outliers – – – – – – – – – 30
4.4 Results of Reliability and Validity Assessment- – – – – 30

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary of Findings – – – – – – – – 40
5.2 Conclusion – – – – – – – – – 41
5.3 Recommendations – – – – – – – – 41
5.4 Suggestions for Future Studies – – – – – – – 42
References – – – – – – – – – – 44

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