INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) DISCLOSURE AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS (DMBS) IN NIGERIA

Abstract

The study focused on analyzing the impact of IFRS disclosure on the financial performance of DMBs in Nigeria following its adoption. This is with a view to examine the impact of IFRS disclosure on DMBs profitability, Liquidity and investment in Nigeria. The study selected ten out of fifteen quoted banks in Nigeria using purposive sampling and analyzed their financial statements from 2015 to 2019. Panel data analysis was conducted to test the statistical significance of IFRS disclosures on the financial performance of deposit money banks. The findings revealed that profitability and liquidity were significantly independent predictors of IFRS disclosures while investment ratio is insignificant because the R² value of (70.24%, 63.74%, 09.42%), this suggests that profitability and liquidity are more influential in predicting IFRS disclosures compared to the investment ratio A high R² value indicates a strong relationship between the independent variable and the dependent variable. This indicates that adoption of IFRS disclosures relatively account for systematic variance in financial performance of DMBs, therefore, the null hypothesis Ho1 and Ho2 were rejected while Ho3 was accepted. The result depicts that the influence of adoption of IFRS disclosure do not occur by chance since the coefficient values of (0.0295, 0.4181, 1.9224, 0.0439) and probability values (0.678, 0.000, 0.000, 0.425) indicate an increase in (Gross Profit Margin, Return on Asset,  Net Profit Margin, Return on Capital Employed) result to increase in Profitability. The coefficient values of (0.3265, 0.0379, -0.0213, - 0.0719) and probability values (0.000, 0.588, 0.538, 0.298) also indicates that only liquidity Ratio has a positive coefficient and significant effect on Market price per share of Nigeria deposit money banks and Non-Performing Loan has no significant effect, while Cost to Income Ratio (CITR) has insignificant negative influence on Market price per share of Nigeria deposit money banks and Loan to Deposit Ratio (LDR) has significant negative influence on  Market price per share of Nigeria deposit money banks. The coefficient values of ( -0.7626, 0.0075, 0.0135, -0.0018) and probability values (0.963, 0.907, 0.790, 0.997) revealed that only EPS and CAD has a positive coefficient with insignificant influence on Market price per share of Nigeria deposit money banks while Price Earnings Ratio (PER) has insignificant negative influence on Market price per share of deposit money banks in Nigeria and only Total Debt to Total Asset Ratio (DR) has significant negative influence on Market price per share of Nigerian’s deposit money banks. Evidence from the study shows that at 5 per cent significance: IFRS disclosures have a significant effect on Nigerian Deposit Money Banks profitability and liquidity while IFRS disclosures have no significant effect on DMBs investment in Nigeria. Based on the results, the study concludes that adoption of International Financial Reporting Standards (IFRS) disclosures has significant impact on the financial performance of DMBs in Nigeria. Based on the findings, it is recommended that Deposit Money Banks (DMBs) in Nigeria should adopt and fully implement International Financial Reporting Standards (IFRS) to maximize its impact on their performance. Additionally, DMBs should closely monitor financial ratios as they have a significant impact on performance.