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Adoption of International Financial Reporting Standards (IFRS) and

the Quality of Corporate Financial Reports of Listed Companies in

Nigeria

Olusola Aremu Owoyele and Folajimi Festus Adegbie

Babcock University, School of Management Sciences, Department of Accounting, Ilishan-Remo, Nigeria

DOI:

https://doi.org/10.51583/IJLTEMAS.2026.150300019

Received: 25 March 2026; Accepted: 20 March 2026; Published: 02 April 2026

ABSTRACT

Good quality of financial reports enhances stakeholders’ confidence and value of listed business entities. The

quality of financial reports has attracted the concern of researchers in accounting literature and that there has

been an ongoing issue of corporate report quality concern. The capital market globalisation has heightened the

pressure to have a standardised financial reporting language, resulting in the expansion in the use of International

Financial Reporting Standards (IFRS). Literature has shown that in Nigeria, listed companies were required to

use IFRS since 2012 in order to improve the quality of financial reporting and to become a part of the global

economy. Nonetheless, ten years after the adoption, there are still concerns on whether there was a real change

in the quality of financial reports. This paper explores how the adoption of IFRS affects the quality of corporate

financial reporting in particular, in the qualitative attributes of relevance and faithful representation of

fundamental nature among listed consumer goods firms in Nigeria. The survey research design was used with

the data to be gathered through questionnaire of 100 persons in the top management of 10 purposely selected

companies with a response rate of 88%. The analysis of data was performed based on descriptive and correlation.

The results indicate strong, positive, and statistically significant effect of IFRS adoption on relevance (Adj R2 =

0.111, F-stat (2, 97) = 68.343, p < 0.05) and also indicate strong, positive, and statistically significant effect of

IFRS adoption on faithful representation (Adj R 2 = 0.166, F-stat (2, 97) = 107.840, p < 0.05). The research also

finds out that the adoption of IFRS has a tremendous positive impact on the quality of financial reporting in the

consumer goods industry of Nigeria but it depends on the strong management skills, the high level of compliance,

and effective institutional and regulatory frameworks. Regulators and corporate management are given

recommendations on how to enhance these enablers to ensure a good quality of reporting is maintained.

Keywords: Adoption of IFRS, Faithful representation, Quality of financial reports, Level of compliance,

Management awareness and training, Relevance, Regulatory support.

INTRODUCTION

The interconnectedness of the financial ecosystem that is caused by the globalization of capital markets has made

cross-border investment a norm instead of an exception (Leuz & Wysocki, 2023). With this integration, there

has been an increased need to have common financial language that will enable the easy comparison of corporate

performance across national borders. In the absence of such a standard, investors cannot evaluate risk and

opportunity with a lot of ease, raising the cost of capital and preventing the free flow of international capital

(Daske et al., 2022). Transparency and comparability are, consequently, the main pillars of contemporary world

finance.

Financial reporting of high quality is of paramount importance to the business and stakeholders. In business,

they help businesses to obtain capital at a cheaper rate, boost corporate reputation, and strategic decision-making

(Ntim et al., 2023). To the stakeholders such as investors, creditors as well as regulators they give the much

needed information to make judgments on stewardship, investment decisions, and stable markets. Nevertheless,

this significance is not achieved in many organisations, especially in developing economies, as a result of a

compliance orientation rather than the content, insufficient technical knowledge, and even a lax enforcement

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regime (Brown et al., 2023). This frequently results in poor-quality areas, including earnings management, poor

disclosure, and lack of adherence to complicated standards, including fair value measurement and revenue

recognition (Dechow et al., 2023). The impacts are serious: to the companies, it causes an increase in the cost of

capital and the decline of reputation; to shareholders and potential investors, it causes misallocation of resources

and wealth destruction; to the capital market and the Nigerian economy, it causes loss of trust in the investor,

slows economic growth, and decreases foreign direct investment (Ahmed et al., 2023; FRCN, 2023).

It is evident that IFRS works in well-institutionalised countries (e.g., Barth et al., 2022). Studies in the developing

countries and Nigeria (e.g., Okpala and Chijoke-Mgbame, 2024; Umoren and Enang, 2023) indicate inconsistent

outcomes, including gaps associated with enforcement, industry-specific issues, and the disregard of the

qualitative aspects of measurement. These loopholes inspired this research. In the past, reforms such as

harmonisation and convergence of national standards have eventually led to the issue of issuing IFRS by IASB.

In Nigeria, the creation of the Financial Reporting Council of Nigeria (FRCN) was one of the most important

policies to push this adoption.

The International Financial Reporting Standards (IFRS) which are made by the International Accounting

Standards Board (IASB) have become the most popular solution in response to the global demandability of

comparability. The basic assumption of IFRS is that financial reporting quality should be increased as this can

be defined as more transparent, more comparable, and, most of all, more decision-useful financial information

(IASB, 2024). The implementation of these standards is a groundbreaking move towards global accounting, as

opposed to the countries accounting regimes of the past.

Nigeria, in accordance with the need to join the global financial framework and draw in foreign direct investment,

made the implementation of IFRS mandatory to all publicly listed companies and other significant entities of the

public interest since 2012 (Alabi and Sanni, 2024). This was the most notable change in regulation, led by the

Financial Reporting Council of Nigeria (FRCN) which differed greatly with the former version of the Nigerian

Statement of Accounting Standards (SAS). The transition was essentially supposed to address the information

asymmetry between corporate insiders and outsiders and consequently enhance the overall quality and reliability

of corporate financial reporting (Kang’ethe & Adeyemi, 2024).

The paper particularly dwells on the enumerated consumer goods companies in Nigeria which is a sector of the

economy that is very important to Nigeria considering its size, market visibility, and its sensitivity to economic

cycles. These companies are keenly monitored by a wide group of stakeholders. Even with the strong theoretical

advantages of IFRS, whether it has a positive impact on the key qualitative properties of financial reports, that

is, relevance and faithful representation, is an empirical issue in the Nigerian environment (Okpala and Chijoke-

Mgbame, 2024). The unique institutional, regulatory, and economic environment of Nigeria is a factor that

affects the background of the implementation and adherence to the international standards. As such, sector

specific research is needed to go beyond the generalisations and offer specific evidence to determine the effects

of this accounting revolution.

It is 10 years after the introduction of IFRS in Nigeria as mandatory and it is long enough to be able to give a

significant evaluation of the effect it brought. Nevertheless, even after this lapse of time, the theme of worries

about the reliability of financial reports published by listed companies in Nigeria still comes up among interested

parties. The effectiveness, disclosures, and ultimate decision-usefulness of the financial information provided

have been periodically challenged by investors, financial analysts, and academic researchers even after the period

of the IFRS (Umoren & Enang, 2023; FRCN, 2023). Although the IFRS conceptual framework is carefully

formulated to help improve financial reporting, it may not be effective in practice. The practical effect depends

on a complex interaction between variables, such as the extent of true compliance by the preparers, the extent of

management experience in the application of complex principles-based standards, and the existence of effective

regulatory officials to impose compliance (Alabi and Sanni, 2024; Kang’ethe and Adeyemi, 2024). Any of these

areas may lack adequacy and therefore there may be discrepancies between reality and expectation of IFRS. The

present study, thus, aims to explore the exact nexus of the adoption of IFRS in form and the perceived quality of

financial reports in a sensitive area of the Nigerian economy.

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The following specific objectives were achieved:

i. examine the effect of IFRS adoption on the relevance of corporate reports of listed consumer goods

companies in Nigeria.

ii. investigate the effect of IFRS adoption on the faithful representation of corporate reports of listed

consumer goods companies in Nigeria.

The following research questions were answered:

i. To what extent has IFRS adoption affected the relevance of financial reports of listed consumer goods

companies in Nigeria?

ii. How has IFRS adoption influenced the faithful representation of financial reports of listed consumer

goods companies in Nigeria?

The following hypotheses were tested in this study:

1: IFRS adoption has no significant effect on the relevance of financial reports of listed consumer goods

companies in Nigeria.

2: IFRS adoption has no significant effect on the faithful representation of financial reports of listed consumer

goods companies in Nigeria.

LITERATURE REVIEW/THEORETICAL REVIEW

Conceptual Review

Relevance

The pursuit of decision-useful financial information remains a central, yet dynamically evolving, objective of

financial reporting frameworks globally. In the contemporary economic landscape, characterized by digital

transformation and heightened stakeholder demands for transparency, the conceptualization of relevance is being

rigorously re-examined. Recent scholarly discourse argues that relevance must now encapsulate the provision of

forward-looking, sustainability-oriented, and technologically integrated data to effectively inform the complex

valuation models of modern investors (Nwosu & Onyekwere, 2025). This expanded view challenges traditional

metrics, emphasizing that information must not only confirm past performance but also illuminate future cash

flow prospects and long-term value creation capacity, including intangible assets and environmental, social, and

governance (ESG) factors (Okpala, 2024). Consequently, the operationalization of relevance through value-

relevance studies is increasingly incorporating non-financial and forward-looking indicators to assess its true

impact on investor behavior and market outcomes.

The issue of relevance is essentially business-related with the question of decision-usefulness of financial

information. According to scholars, it is the ability of information to shape the economic behavior of those who

use it by assisting them in evaluating past, present, or future events or in confirming or refuting past evaluations

(Barth et al., 2022; Ohlson, 2022). This attribute summarises both predictive value which involves information

as an input to guide the forecasting of future outcomes and confirmatory value which involves the provision of

feedback with regards to past evaluations.

Another important element that is interrelated with relevance is that of materiality that serves as an entity-related

threshold. Materiality is a property of information that determines how the information, when omitted or

misstated, may affect the economic decisions made by the users based on the financial statements (Dechow et

al., 2023). Value-relevance studies tend to be used to operationalise the abstract concept of relevance in empirical

research. These tests estimate the statistical relationship between financial reports (e.g., earnings, book value)

and market-based reports (e.g., share prices). The presence of a strong association is viewed as an indicator that

investors view the accounting data to be relevant in their models of the valuation decision, which validates its

decision-usefulness (Barth et al., 2022).

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Faithful Representation

As the complexity of business transactions and the use of significant judgment in financial reporting increase,

the imperative for faithfully representative information becomes ever more critical. Faithful representation

serves as the foundational bedrock that legitimizes financial statements, ensuring they are not merely compliant

with standards but are a credible depiction of economic reality. Contemporary research highlights that achieving

this qualitative characteristic is profoundly challenged by the rise of complex financial instruments, climate-

related risks, and the need for subjective fair value estimates (Umoren & Enang, 2025). Scholars contend that in

this environment, the components of completeness, neutrality, and freedom from error are interdependent; for

instance, a lack of completeness in disclosing key estimation uncertainties inherently compromises neutrality

and introduces a form of measurement error (Kang’ethe & Adeyemi, 2025). Therefore, empirical proxies for

faithful representation, such as earnings quality metrics, must now be interpreted within a broader context that

considers the quality of related disclosures and the governance overseeing management's critical judgments.

Faithful representation is the characteristic that makes the users sure that financial information is a true reflection

of economic phenomena that it is supposed to portray. The information to be faithfully representative should be

complete, neutral, and devoid of error, which is the primary accent in the modern accounting literature (Dechow

et al., 2023; Leuz and Wysocki, 2023). Completeness has that all the information needed by a user to understand

is provided such as description and explanation. In neutrality, information is to be presented without prejudice

to attain the predicted outcome or produce a certain behavioral adjustment.

The fact of being free of error does not mean that there are no errors or gaps in the description of the reported

phenomenon but means that the selected process of creating the information was used correctly (Dechow et al.,

2023). In empirical studies, the most frequent proxy of faithful representation is earnings quality, that is, the

degree of earnings management. The existence of lower levels of discretionary accruals, indicating that earnings

are less prone to management manipulation, is viewed as an indication of an increased faithful representation

and implies that the reported profits reflect more closely the actual economic performance of the entity (Dechow

et al., 2023; Umoren and Enang, 2023).

Adoption of International Financial Reporting Standards (IFRS)

The global convergence towards International Financial Reporting Standards (IFRS) represents a seminal shift

in financial reporting, aimed at enhancing transparency, comparability, and investor confidence across capital

markets. However, contemporary research increasingly frames adoption not as a binary event but as a complex,

multi-stage process of institutionalization, where the formal decision to adopt is merely the beginning. Scholars

now emphasize that the theoretical benefits of IFRS such as improved reporting quality and reduced cost of

capital are contingent upon the depth and rigor of implementation within a specific national context (Agana,

Mensah, & Botchway, 2025). The emerging consensus is that the mere issuance of IFRS-compliant statements

is insufficient; genuine value is realized only through substantive adoption, characterized by a deep-seated

application of the principles-based framework that permeates organizational practices and judgment (Brown,

Preiato, & Tarca, 2024). This distinction between de jure and de facto adoption is critical, as it directs analytical

focus toward the enabling conditions and mediating factors that determine ultimate success.

The process of IFRS adoption is not understood as a simple binary decision of accounting policy, but as a multi-

dimensional phenomenon, the success of which defines the results of reporting. Scholars believe that the formal

adoption of IFRS does not necessarily mean the increase in the quality of the reports; its adoption strongly

depends on the content and intensity of its application (Agana et al., 2023; Brown et al., 2023).

It is a process that is mediated by a number of critical, interdependent factors. To begin with, the Level of

Compliance is the most important. The principles-based IFRS characteristics compel the levels of compliance

with its spirit and demands to be high. It has been found that in a weak enforcement environment, adoption may

result in only symbolic or checkbox compliance, and does not result in any substantive increase in transparency

(Brown et al., 2023). Second, Management Awareness and Training is also an important human capital

parameter. Moving the IFRS to a judgmental system requires high levels of experience. Misapplication and

mistake may occur due to lack of profound learning and lifelong training among the preparers which nullify the

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potential advantages of the standards (Kang’ethe & Adeyemi, 2024). Third, the enabling environment is the

Regulatory and Institutional Support. To be implemented effectively, the regulatory requirement should be

accompanied by active supervision, clear direction, and believable enforcement by such organisations as the

Financial Reporting Council to motivate quality implementation and discourage lack of compliance (Alabi and

Sanni, 2024; Ntim et al., 2023).

Accordingly, the adoption of IFRS is also an independent variable in this study that is expressed through and its

impact is mediated by the level of compliance, management competence, and support of the institution that are

evident in the Nigerian consumer goods industry.

Level of IFRS Compliance

The level of compliance acts as the critical filter determining whether the codified principles of IFRS are

translated into practice, thereby moving from theoretical elegance to practical efficacy. High-quality compliance

transcends a checkbox mentality, requiring preparers to exercise professional judgment in line with the objective

of fair presentation, a significant challenge in environments historically accustomed to rules-based standards.

Recent empirical work underscores that compliance is not uniform but exists on a spectrum, heavily influenced

by the strength of a country's enforcement mechanisms and the prevailing corporate governance culture (Ntim,

Soobaroyen, & Broad, 2025). Studies in emerging markets like Nigeria reveal a persistent gap, where technical

compliance with disclosure checklists may be achieved while the substance and qualitative judgments

underpinning the standards are inconsistently applied (Alabi & Sanni, 2024). Consequently, assessing the level

of compliance is essential for understanding the true impact of IFRS on financial reporting quality, as it measures

the extent to which the standards' intended economic substance is captured.

Theoretical advantages of IFRS included within the principles-based model can be applied in real life only at

high compliance rates among financial statements preparers (Agana et al., 2023). The quality issues identified

in the problem statement are persistent; hence, it can be stated that there can be compliance gaps. The academic

literature has continuously revealed that implementing the regime and the force of the legal and institutional

framework of the country are the major determinants of compliance rates (Brown et al., 2023).

The formal adoption of IFRS might not have a substantive effect on the quality of reporting in the context of less

effective enforcement mechanisms and less severe legal penalties of non-compliance. To the extent that

companies might implement the standards formally rather than informally, they may also practice the concept

of checkbox compliance without necessarily accepting the real purpose of transparency (Wadesango et al.,

2016). Consequently, the degree of compliance is an important sieving mechanism that the IFRS potential has

to be subjected to in order to impact the dependent variables.

Management Awareness and Training on IFRS

The transition to IFRS represents a profound paradigm shift that demands a corresponding evolution in human

capital, making management awareness and technical competence a non-negotiable pillar of successful

implementation. The principles-based, judgment-oriented nature of IFRS renders it highly dependent on the

expertise, ethical grounding, and interpretive skills of those preparing the financial statements. Current literature

identifies a significant "competency gap" in many adopting countries, where the complexity of standards on

financial instruments, revenue recognition, and fair value measurement outpaces the available technical training

(Kang’ethe & Adeyemi, 2025). This gap can lead to unintentional misapplication, inconsistent practices, and a

reliance on superficial interpretations, thereby eroding the very quality improvements IFRS seeks to introduce.

Therefore, continuous, high-quality professional development is not an ancillary support activity but a core

determinant of faithful representation, ensuring that managerial judgment is informed, consistent, and aligned

with the framework's objectives (Umoru & Adegoke, 2024).

The effective adoption of IFRS is a paradigm shift of the currently rules-based past national standards to one

that is principles-based and judgmental. This shift also needs a lot of investment in human capital. The

management and accounting personnel should also have a profound comprehension of the new framework in

order to make relevant judgment and make sound estimates (Kang’ethe & Adeyemi, 2024).

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The absence of proper and consistent training and awareness, which may exist in the environment, such as

Nigeria where there may be insufficient personnel, may result in massive misinterpretations, inconsistent

practice, and accidental mistakes (Umoru and Adegoke, 2024). Such shortcoming can have a devastating effect

on the quality of financial reports because technical excellence of IFRS is destroyed by the inability to correctly

use it. In such a way, effective adoption is based on the human expertise.

Regulatory and Institutional Support

The role of regulatory and institutional support constitutes the foundational ecosystem within which IFRS

adoption either flourishes or flounders. Effective implementation is inextricably linked to the presence of robust

oversight, clear interpretive guidance, and credible enforcement by national regulatory bodies such as the

Financial Reporting Council of Nigeria (FRCN). Institutional theory posits that without these supportive

structures, organizations may resort to ceremonial or symbolic compliance to gain legitimacy without altering

core practices. Recent analyses affirm that the quality of the institutional environment, particularly the robustness

of audit oversight and the severity of sanctions for non-compliance, is a more powerful predictor of reporting

quality than the adoption of IFRS itself (Brown et al., 2024). In the Nigerian context, the ongoing strengthening

of the FRCN’s monitoring capacity and the development of sector-specific implementation guides are cited as

pivotal institutional factors that can elevate compliance from a mere formality to a substantive driver of financial

reporting quality (Ntim et al., 2025).

The most important factor in achieving high-quality implementation is a strong and proactive regulatory support

by national regulatory bodies such as the Financial Reporting Council of Nigeria (FRCN), the Securities and

Exchange Commission (SEC) as well as the Nigerian Stock Exchange (NSE). This assistance goes beyond a

simple provision of a mandate and involves the provision of clear and timely implementation guidance, as well

as actively overseeing the implementation and credibly enforcing sanctions in cases of non-compliance (Alabi

and Sanni, 2024).

The reference to the necessity of strong regulatory controls in the problem statement highlights an important

fact: the success of IFRS is incorporated and limited by the rest of the institutional system of the country (Ntim

et al., 2023). The motivation to report high quality may be poor without the strong watchdogs. Thus, institutional

support is not a peripheral part of the research problem but the central part of the problem because it

preconditions the environment, in which IFRS functions.

Theoretical Review and Framework

The theoretical perspectives of three complementary theories form the basis of this study and have the rational

grounds of explaining how the adoption of IFRS may affect the quality of financial reporting. Both theories

provide a different perspective within which the relationship between the dependent and independent variables

can be explained.

Agency Theory

Developed by Jensen and Meckling (1976), the Agency Theory assumes that in the contemporary corporation

where ownership is decoupled with control, there is a core conflict of interest between the principals

(shareholders) and the agents (managers). As agents, managers can possess certain personal incentives which

are not necessarily consistent with the objective of shareholder wealth maximization. The misalignment of these

incentives may be reflected in the presentation of financial reports in order to hide poor performance or to receive

more bonuses and job security.

The most important facilitator to this behavior is information asymmetry wherein the managers have more and

superior information of the actual performance of the company and its future prospect than the outside

shareholders. Such asymmetry adds to the agency problem, where the shareholders are unable to be able to

observe the managerial actions perfectly. This theory offers an effective justification in the reasons why the

quality of financial reporting is important; it is one of the main instruments of alleviating this asymmetry.

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Theorised to decrease this information asymmetry is IFRS that dedicates significant attention to fair value

reporting, increased disclosures, and transparency in general (Barth et al., 2022). In requesting the delivery of

more relevant and faithfully representative information, IFRS allows the shareholders to control the management

and hold them accountable. This will minimise the agency costs and level the interest of both parties. Thus, the

expectancy that IFRS implementation would result in the improvement of both the relevance and faithful

representation, the dependent variables of this paper, is directly supported by the Agency Theory,

Signaling Theory

The signaling theory was presented by Spence (1973) as an attempt to explain how parties with an information

advantage (corporate insiders) can communicate credible information to less-informed parties (outside investors)

as a means of bridging the information gaps. In an effective capital market, quality firms tend to have a solid

motivation to stand out of the inferior quality firms in a bid to have their investment being attracted at a fair

price.

Such signals are sent using financial reports. Nonetheless, a signal has to be expensive to replicate by low-quality

firms in order to be credible. Such a potent and expensive signal can be the implementation of a strict and

complicated reporting standard such as the IFRS. The wide disclosure rules coupled with the high level of

judgment and skills required render the imitation of the quality of reporting of high-performing firms by poorly

performing firms cumbersome because poorly performing firms can hardly replicate the disclosure qualities of

high-performing firms without disclosing their actual operations.

A company indicates its transparency and good governance by generating financial statements that are more

relevant and reliable when utilising the IFRS. Such a plausible indication is capable of decreasing perceived risk,

decreasing the cost of capital incurred by the firm, and increasing the number of investors (Leuz & Wysocki,

2023). Signaling Theory, therefore, offers an interesting explanation of why firms would voluntarily adopt high-

quality reporting after IFRS and offers a direct rationale to the objective of the research which aims at analyzing

enhanced relevance.

Institutional Theory

According to the Institutional Theory developed by DiMaggio and Powell (2023), organisations implement

structures and practices not only because of the technical efficiency, but also because of the need to obtain

legitimacy, resources, and stability as an institution. Organisations that are to survive and thrive adhere to

generally accepted rules of the game, a process that results into homogenisation, or isomorphism among

organisations.

DiMaggio and Powell distinguished three types of isomorphic change, which include coercive (formal pressures

by entities on which the organisation is dependent on, including governments and regulators), mimetic

(emulating successful counterparts as a response to uncertainty), and normative (via professionalization and

network pressure such as trade associations). The theory can be applied to the adoption of IFRS especially in the

determination of the motive. Mandatory adoption of IFRS Nigeria is the classical example of a coercive

isomorphism as regulative fiat compelled a shift in accounting practices on the whole corporate landscape. The

major reason why companies chose to switch to the IFRS was to meet the legal demands and ensure that they

will be recognised in the eyes of their international investors, creditors, and other stakeholders. Nevertheless, the

theory also implies that the result, whether such an adoption will result in any real quality improvement is a

factor of the wider institutional context (Ahmed et al., 2023). This is directly connected to the conditioning

factors of compliance, regulatory support and management training covered in the conceptual review in which

they are viewed as critical components of the institutional fabric that defines the achievement of the adoption.

Stakeholders Theory

Stakeholder Theory, advanced by Freeman (1984), argues that corporations have responsibilities to a broad set

of stakeholders including employees, customers, suppliers, creditors, and the community beyond just

shareholders. For listed organizations, which are the focus of this study, this broader accountability is paramount,

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as their actions and disclosures impact a wide ecosystem. High-quality financial reporting under IFRS is a critical

tool for discharging this accountability. By providing relevant and faithfully representative information,

management meets its fiduciary duty to all capital providers and enhances transparency for other stakeholders

who rely on financial statements for decision-making (Ntim et al., 2023). Stakeholder Theory thus expands the

rationale for improving financial reporting quality from a narrow agency perspective to a broader legitimacy and

sustainability imperative, justifying why the qualitative characteristics of financial information are vital for listed

firms in maintaining their social license to operate and fostering long-term trust.

Empirical Review

Global Evidence

The global empirical literature on the impact of International Financial Reporting Standards (IFRS) presents a

nuanced and contingent picture, moving beyond initial optimism to a focused analysis of the institutional

preconditions necessary for its success. A robust stream of recent research confirms that while IFRS adoption is

associated with increased comparability and market liquidity, its effect on fundamental reporting quality metrics

such as earnings attributes and value relevance is heavily mediated by the strength of a country's legal

enforcement and audit oversight (Brown et al., 2024). For instance, cross-jurisdictional studies find that the

promised reduction in the cost of capital and improvement in investment efficiency materialize primarily in

environments with strong investor protection regimes and credible regulatory threats (Leuz, 2024). This body of

evidence decisively shifts the debate from whether IFRS improves quality to under what conditions, establishing

that the standards themselves are a necessary but insufficient condition for reform, requiring a supportive

institutional ecosystem to unlock their full potential.

An international study by Barth et al. (2022) revisited the controversial advantages of International Financial

Reporting Standards (IFRS), in which they mainly examined the relevance and true reporting of fair value

information. Their research study, consisting of a global sample of companies in more than 30 jurisdictions, re-

established that those with effective jurisdiction IFRS enforcement systems were found to have experienced

greater gains in these qualitative attributes. Daske et al. (2022) supported this observation with an extensive

fifteen-year retrospective and concluded that the adoption of IFRS has resulted in more transparent, comparative

and decision-useful financial statements especially in situations where investor protection and institutional

quality are strong. Both articles emphasise that the ability of IFRS to bring about an improvement in the quality

of reporting can only be possible depending on the legal and enforcement framework of a given country and not

the standards.

Continuing on this, Ahmed et al. (2023) reviewed the decade of post-implementation of IFRS adoption and

doubted the universality of its benefits. By looking at the results of 48 countries, their study discovered that in

countries with weak regulatory systems, the IFRS adoption, even though enhancing the quality of accounting,

was not consistent over a period. They contended that IFRS is a booster that can only take place when there are

powerful institutions of monitor and credible audit management. The contingent interpretation was also

advocated by Brown et al. (2023) who demonstrated that the level of enforcement plays a major moderating role

in the effectiveness of IFRS. They came to the conclusion that the global convergence movement cannot be

measured without considering the institutional realities that establish the quality of compliance and financial

transparency.

Conversely, more recent empirical studies were taken by Leuz and Wysocki (2023), which followed economics-

of-disclosure view to evaluate the overall market impact of IFRS. Their cross-country regression models found

out that although comparability and investor confidence are positively affected, the cost of disclosure and

compliance is still high among small and medium sized entities which might nullify some of the informational

advantages of the IFRS. Similarly, Dechow et al. (2023) re-examined the literature on the quality of earnings in

the IFRS age and discovered inconsistent reports of quality improvement with stable differences between

industries and regions. A combination of these international studies proves that though IFRS plays a positive

role in transparency and comparability, its effectiveness is closely tied to interactions between enforcement and

governance and the maturity of the market place.

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Evidence from Nigeria and Africa

The empirical evidence from Nigeria and Africa provides a critical ground-level perspective on the IFRS

adoption journey, highlighting both the region's unique challenges and the heterogeneous outcomes across firms

and sectors. Studies specific to the Nigerian context reveal a mixed and evolving landscape; for example, while

some research indicates improved value relevance of accounting information post-adoption in the consumer

goods sector, other findings show persistent earnings management and a significant gap between formal

compliance and substantive application (Okpala, 2024; Umoren & Enang, 2025). Pan-African research further

contextualizes these findings, demonstrating that the benefits of IFRS are most pronounced in firms with strong

corporate governance structures and in countries where adoption was accompanied by tangible enhancements in

regulatory capacity (Ntim et al., 2025). This regional evidence underscores that the translation of global

accounting standards into local reporting quality is a complex function of firm-level preparedness, sectoral

dynamics, and, most critically, the evolving strength of national regulatory institutions.

Going to the African and Nigerian settings, Okpala and Chijoke-Mgbame (2024) employed the empirical study

to examine the relevance of accounting information on the value of the consumer goods industry in Nigeria,

prior to and after the adoption of the IFRS. Their analysis with the help of panel data and regression models

demonstrated that post-IFRS periods experienced more associations between earnings, book values and market

prices which are indicative of increased decision usefulness. Based on it, Umoren and Enang (2023) explored

the aspect of faithful representation in the frames of earnings management and found out the continuity of

manipulation after switching to IFRS. Their longitudinal study on a number of years of financial reports showed

that the earnings quality did not change significantly which implied that compliance in form does not necessarily

correspond with compliance in substance. The discrepancy of these results reveals the heterogeneity of sectors

and distribution of IFRS standards in Nigeria.

Equally, Ntim et al. (2023) addressed the relationship between corporate governance and IFRS transparency in

the economies of Africa and determined that effective corporate governance frameworks enhance the IFRS

advantages. The more independent boards and active audit committees of a country were more transparent and

had lower cases of opportunistic reporting. This was also confirmed by Alabi and Sanni, (2024), in a Nigerian

setting whereby, the quality of regulatory enforcement by the Financial Reporting Council was a very significant

factor in determining the quality of compliance with IFRS in the Nigerian Stock Exchange. They had suggested

that enforcement should be institutionalised in order to avoid symbolic compliance, which is still common in the

developing economies. All these results point to the structural contingency of IFRS success on the national

system of governance.

Continuing this argument, Kang’ethe and Adeyemi (2024) also investigated how managerial competence would

influence a successful adoption of IFRS in the West African countries. Their findings indicated that technical

readiness and training of financial managers were critical in making sure that the adoption of IFRS produced

high-quality disclosures. Umoru and Adegoke (2024) contributed that in Nigeria, lack of professional training

and poor audit controls have slowed the overall implementation of the intended benefits of IFRS and that in the

non-financial segments. Conversely, Nwosu and Onyekwere (2025) observed that MNC subsidiaries in Nigeria

would record an elevated reporting quality as a result of the international controls by their parent firms. These

empirical observations put together conclude to affirm that IFRS adoption benefits are not intrinsic to the

standards but are a resultant challenge of both the strength of governance and professional competence and the

enforcement of the standards.

METHODOLOGY

The Survey research design was adopted eliciting responses from respondents through questionnaire

administered via the Google form. The population comprised of 25 consumer goods companies. A sample of 10

consumer goods companies was selected purposively based on their ranking and contribution to economic

growth. 10 top management staff each of 10 consumer goods companies that was selected purposively making

a total of 100. The response rate was 88%. The model is as specified below:

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Y = f (X)

Where Y = Dependent Variable represented by Quality of Corporate Financial Reports

= Relevance (RL)

= Faithful Representation (FR)

X = Independent Variable represented by Adoption of IFRS

1 =

Level of IFRS Compliance (LC)

2 =

Management Awareness and Training (MAT)

3 =

Regulatory and Institutional Support for IFRS Implementation (RIS)

= Model Coefficient and parameter estimates

= Error term

= β

+ β

+β

MAT

+ β

RIS

+ e

i..........................

= β

+ β

+β

MAT

+ β

RIS

+ e

i..........................

Validity Test and Reliability Test

While every effort was made to develop clear and straightforward questions, the material validity of the

instrument went through additional testing by distributing it to a pilot group of 10 respondents for evaluation.

Cronbach’s Alpha was used in the meantime to guarantee the instrument's dependability.

Table 3.1: Reliability Test

Reliability Statistics

Cronbach's Alpha

Cronbach's Alpha Based on

Standardized Items

No of Items

.787

.887

Source: Author’s computation using SPSS 23

The result of the Cronbach’s Alpha is 0.787 thus, this reflected the internal consistency of the research

instrument. It is concluded that there is reliability of the questions raised in the questionnaire.

RESULTS, ANALYSIS AND INTERPRETATION

The study analysed descriptive statistics such as mean, maximum, minimum, standard deviation, skewness,

and kurtosis to analyse the responses.

Descriptive

Statistics

Valid

Mean

3.91

3.7

3.4

3.5

3.6

3.5

4.05

3.90

3.8

4.0

3.9

4.0

3.9

3.8

Std. Deviation

1.28

1.1

1.00

.971

1.0

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Skewness

1.02

.98

.69

.68

.75

.82

1.13

1.02

.94

1.1

.98

1.0

Kurtosis

.065

.13

.29

.41

.11

.14

0.91

.840

.52

.74

1.6

1.1

.75

.82

.92

Minimum

Maximum

Source: Researchers Computation (2025)

Interpretation

Descriptive statistics of the fifteen questions (Q115) offers useful information about the perceptions and attitudes

of respondents in the dimensions that were measured. The scale of the mean scores (between 3.45 and 4.05)

reveals that the majority of the respondents rated the moderate to high level of agreement with the presented

statements.

In particular, the highest averages were obtained in Q7 (Mean = 4.05), Q10 (Mean = 4.02), Q11 (Mean = 3.99),

and Q12 (Mean = 4.00), which meant that these were strong positive responses and greater levels of agreement

among the participants. On the other hand, Q3 (Mean = 3.45) and Q4 (Mean = 3.56) posted the lowest means

indicating slightly less yet desirable responses. All in all, there is a strong tendency of the mean values to cluster

together, which suggests that there was no radical divergent opinion among the respondents.

The standard deviations of 0.97 to 1.28 show variability in the answers that is moderate. Q1 (1.283) has the

largest standard deviation and indicates more spread of opinions whereas Q8 (0.971) and Q11 (1.000) have more

uniformity, which implies that more respondents agreed with those questions. This average measure of

dispersion indicates that although the majority of respondents were naturally disposed toward agreement, a small

number were characterized by some other points of view thus resulting in equal distribution of responses.

Skewness values are mostly negative with the range of values between -1.177 and -0.686 with the exception of

Q15 (1.069) that has skewness of 1.

The skewness value was negative implying that the majority of the responses were concentrated at the right side

of the scale implying general agreement or positive perception among the participants. The positive skew of Q15

suggests that a higher number of the respondents chose relatively lower scores on the question which

demonstrates some variance in the perception to that particular item.

The kurtosis values which are generally close to zero and marginally positive show that the data distributions

are moderately peaked to near normal. It is also interesting to note that Q11 (1.604) and Q12 (1.131) possess

greater kurtosis indicating that the responses are more concentrated around the mean and there is less variation,

which could mean more people agree with these two items.

In contrast, some of the values, like Q4 (-0.416) and Q3 (-0.292), exhibit the flatter distributions meaning that

the varied answers are higher in these values. The fact that the minimum and maximum values are all 1-5

indicates that the respondents used all the response scales showing active involvement and different opinions in

answering the questions.

On the whole, these results indicate that the respondents are quite positive in their perception regarding all the

measured items, and the desire to agree is present and has only weak dispersion between individual questions.

The weak negative skew and moderate kurtosis depict that the response of the sample is concentrated and skewed

to the left in a way and the prevalent sentiment among the participants is positive.

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To what extent do the company's financial reports provide a reliable basis for forecasting its future

earnings and cash flows?

How well do the financial reports help you confirm or adjust your previous assessments of the

company's financial performance?

How effectively does the company's financial reporting communicate material information in a timely

manner, allowing users to make informed decisions while the information is still relevant?

To what degree do the financial reports include all necessary information and disclosures (including

notes) to provide a full understanding of the company's transactions and financial position, without

being misleading by omission?

How confident are you that the financial reports are presented neutrally, without being unduly

influenced by management bias to present a more favorable or unfavorable picture of the company's

performance?

To what extent do the financial reports reflect the underlying economic reality of transactions (their

substance) rather than just their legal form, and how free from material error do you believe the

reported figures are?

To what extent do your company's annual financial statements fully comply with all relevant and

applicable IFRS standards and interpretations?

How often does your company engage in practices that deviate from the specific requirements of IFRS

(e.g., using unacceptable accounting policies or omitting required disclosures) for the sake of simplicity

or other objectives?

To what degree are the recognition, measurement, presentation, and disclosure of complex accounting

areas (e.g., financial instruments, revenue, leases) in your financial reports aligned with the detailed

provisions of the corresponding IFRS standards?

How would you rate the overall understanding and technical proficiency of the senior management and

finance team regarding the key principles and recent updates in IFRS?

To what extent does the company invest in continuous IFRS training and professional development

programs for its accounting and finance personnel?

How effectively does management demonstrate its commitment to the underlying principles of

transparency and accountability embodied by IFRS, beyond mere compliance?

How effective are the national regulatory bodies (e.g., Securities Exchange Commission, Financial

Reporting Council) in enforcing compliance with IFRS through their monitoring and review processes?

To what extent is there clear, consistent, and timely guidance from relevant institutions to help resolve

practical complexities and ambiguities encountered during IFRS implementation?

How adequate are the legal and institutional frameworks (e.g., auditing standards, corporate governance

codes, penalty systems) in supporting and reinforcing high-quality IFRS reporting by listed companies?

Test of Hypotheses

Pre-estimation Tests

In order to ascertain the appropriateness of the data used, the series were tested for multicollinearity using the

Variance Inflation Factor (VIF) and correlation matrix tests.

The VIF results reveal the presence or absence of multicollinearity through the mean value but does not reveals

the degree of association among the variables in order to identify the variables affected. However, the correlation

matrix reveals the magnitude of the associations among the variables under study.

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Variance Inflation Factor (VIF) Test Result

Variables

VIF

1/VIF

1.09

0.917431

MAT

1.06

0.943396

RIS

1.15

0.869565

Mean VIF

1.10

0.910131

Source: Researcher’s Computation (2025)

The results show the mean VIF to be 1.10 which is below the threshold of 5 and signifies the absence of

multicollinearity problems among the variables data series.

Pearson Correlation Matrix Test

MAT

RIS

0.0971

-0.1026

MAT

0.0971

-0.0443

RIS

-0.1026

-0.0443

Source: Researcher’s Study (2025)

LC is positively but weakly associated with MAT and RIS

Test of Hypothesis One: Examine the effect of IFRS adoption on relevance of corporate reports of listed

consumer goods companies in Nigeria

Dependent Variable: RL

Variable

Coefficient

Standard Error

t- test

Prob

Coefficients: Constant

2.072

0.149

13.948

0.000***

0.136

0.023

5.883

0.000***

MAT

0.127

0.022

5.902

0.000***

RIS

0.144

0.020

7.294

0.000***

R-square

0.113

Adj- R-square

0.111

Prob F-stat

0.000

F-statistic

68.343

= β

+β

+ β

MAT

+ β

RIS

+ µ

it……………

eqn i

= 2.072 +0.136

+ 0.127

+ 0.144

+ µ

……. eqn i

The regression analysis results presented showed the causality between IFRS adoption and relevance of

corporate reports. The result revealed that all the proxy of IFRS adoption exert a positive effect on relevance of

corporate reports. This is depicted by the positive signs of the coefficients (β

= 0.136); (β

= 0.127) and (β

0.144) respectively. 1 % increase in level of compliance will lead to 13.6% increase in relevance, 1% increase

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in management awareness and training will bring about 12.7% increase in relevance, 1% increase in regulatory

support and implementation will bring about 14.4% increase in relevance.

The Adjusted R

which measures the proportion of the changes in relevance is as a result of changes in LC, MAT

and RIS depicts that only 11.1% changes in the relevance of corporate reports was attributable to the interactions

of the IFRS adoption proxies in the model, while the remaining 88.9% were from other factors not captured in

the model.

Decision

The probability, F-stat (68.343) = 0.000 is significant at p < 0.05 makes the paper reject the null hypothesis

which states that “there is no significant effect of IFRS adoption on the relevance of corporate reports” and

accepts the alternate hypothesis that “there is a significant effect of IFRS adoption on the relevance of corporate

reports.

Test of Hypothesis Two: Investigate the effect of IFRS adoption on faithful Representation of corporate

reports of listed consumer goods listed in Nigeria

Dependent Variable: FR

Variable

Coefficient

Standard Error

t- test

Prob

Coefficients: Constant

0.676

0.196

3.446

0.001***

0.098

0.030

3.224

0.001***

MAT

0.221

0.028

7.765

0.000***

RIS

0.238

0.026

9.092

0.000***

R-square

0.167

Adj- R-square

0.166

Prob F-stat

0.000

F-statistic

107.480

= β

+β

+ β

MAT

+ β

RIS

+ µ

………………eqn ii

= 0.676 +0.098

+ 0.221

+ 0.238

+ µ

………………..eqn ii

The results of the regression analysis provided demonstrated the causality relationship between IFRS adoption

and the faithful reporting of corporate reports. The finding showed that each of the proxy of IFRS adoption have

a positive influence on faithful representation. The positive signs of the coefficients (: 0.098); (: 0.221) and (:

0.238) respectively illustrate this. 1% change in the level of compliance will lead to an increase in the level of

faithful representation by 9.8 percentage, 1% change in management awareness and training will lead to an

increase in level of faithful representation by 22.1 percentage and regulation implementation will lead to an

increase in faithful representation by 23.8 percentage respectively. The Adjusted R2 that represents the share of

change in the level of faithful representation due to changes in LC, MAT and RIS portrays that, the 16.6%

changes in the faithful representation could be attributed to the interaction of IFRS adoption proxies in the model

whereas the rest 83.4% was due to other factors that were not included in the model.

Decision

The fact that the probability, F-stat (107.480) = 0.000 is significant at p < 0.05 causes the paper to reject the null

hypothesis which states that: there is no significant effect of IFRS adoption on the faithful representation of

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corporate reports and accept the alternate hypothesis that: there is a significant effect of IFRS adoption on the

faithful representation of corporate reports.

DISCUSSION OF FINDINGS

The results are consistent with the agency theory and signalling theory. The IFRS helps investors to make better

judgments by enhancing the predictability and confirmatory value of financial reporting by improving

transparency and mitigating information asymmetry. The findings are relevant to international literature like

Barth et al., (2022), Daske et al., (2022) and even Nigerian articles like Okpala and Chijoke-Mbgame (2024)

that confirm the relevance of value in the case of emerging markets with the adoption of IFRS. This means that

compliance, managerial skills and regulatory systems are all designed to enhance the usefulness of financial

information in decisions. The adjusted R square of 0.111 though shows IFRS adoption is a significant material

driver, other unmeasured determinants like corporate governance quality, audit quality and market forces are

also major relevant determinants.

The findings also give credence to agency theory and is in line with principle based nature of IFRS which adheres

to substance over form. The conclusions is that the better the management is trained and the regulators effective

in the financial reports, the less likely they are to be manipulated hence increasing their credibility. Nevertheless,

the fact that the level of compliance has a lower coefficient than management awareness and training and

regulatory and institution support indicates that compliant actions without ability and supervision may not be

effective enough to enhance faithful representation that is supported by Umoren and Enang (2023) study as they

observed persistent earnings management in Nigeria that indicates the disconnect between formal adoption and

substantive implementation.

CONCLUSION AND RECOMMENDATIONS

The paper aimed to review the impact of adoption of IFRS on quality of the financial reporting of the listed

consumer goods firms in Nigeria with a specific regard to the relevance or accurate representation.

In the paper hypothesis one the authors concluded that IFRS adoption has a significant positive effect on

relevance of corporate reports and hypothesis 2 that it also had a significant positive effect on faithful

representation of corporate reports. The study however concluded that there is a great impact of adoption of

IFRS on quality of corporate reports.

Based on the conclusion and findings, the following recommendations are proposed:

1. Regulatory bodies such as the FRCN and SEC should enhance and intensify monitoring and enforcement

mechanism to ensure substantive compliance with IFRs moving beyond a checkbox approach. This

includes conducting more frequent and rigorous reviews of financial statements.

2. Corporate management of listed companies should foster an internal corporate culture that prioritizes

transparency and the underlying principles of IFRS, rather than treating it as a mere compliance exercise.

3. Professional Accounting bodies and institutions should facilitate regular workshops, seminars and

knowledge sharing sessions on recent IFRS updates and complex implementation issues.

Contribution to Knowledge and Future Research

The study contributes to existing knowledge in the following areas:

Theory: The research contributes to the theoretical discussion in that it combines and implements three

fundamental theories- Agency, signaling and institution theory to uncover the phenomenon of IFRS adoption in

a developing economy. It shows that adoption of the IFRS would help to prevent agency costs through

information asymmetry, serves as a substantial signal of transparency to the market and is motivated by coercive

isomorphism. These results confirm the applicability of these theories to the explanation of the consequences of

accounting reforms in the institutional context such as Nigeria.

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Concepts: The paper offers a subtle conceptual framework whereby IFRS adoptions are not seen as a one-

dimensional event; rather, it is a multidimensional construct with critical variables being the compliance level,

management awareness and regulatory support. This conceptualization provides a finer form of explanation of

channels that IFRS affects the quality of reporting beyond a direct cause-effect relationship.

Empirics: It validates the favorable effect of IFRS on reporting quality based on the outcomes of the model

having the ability to make prediction and forecasting that IFRS adoption can affect quality of corporate reports.

The work bridges a major contextual and sectorial knowledge gap on the literature through offering recent

empirical data of the consumer goods industry in Nigeria, which is a vital yet understudied arm of an emerging

African market.

Accounting Practice: To practitioners and policy makers, the research will provide tangible findings that

suggest that the benefits of IFRS depend on a conducive ecosystem. It specifically points out the success factors

levers- management competence, regulatory rigor and substantive compliance that must be focused on, in order

to achieve maximum potential of adoption of IFRS. This offers them a strategic plan to the companies that are

trying to enhance their reporting and the regulators that want to increase the overall standard of the financial

information in the capital market.

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