Title: International Financial Reporting Standards (IFRS) and Financial Performance in Nigeria: Pre and Post Adoption Analysis
Authors: Peace Udonna Uwadilachi and Orits Frank Ebiaghan
Volume: 10
Issue: 1
Pages: 33-39
Publication Date: 2026/01/28
Abstract:
This study examined the impact of the adoption of International Financial Reporting Standards (IFRS) on the financial performance of the Nigerian banks. The study focused on the dynamic effects on Liquidity (LIQ), Return on Assets (ROA), Capital Adequacy Ratio (CAR), and Earnings Quality (EQ). Utilizing an expanded panel dataset spanning 18 listed Nigerian banks over a 14-year period (2005-2011 pre-adoption and 2018-2024 post-adoption), the research employs Fixed Effects Panel Regression analysis to distinguish between immediate structural shifts and long-term trend adjustments. The empirical results reveal a nuanced, dual impact. Performance and informational quality metrics: ROA and EQ, exhibited a highly statistically significant, immediate positive level shift upon IFRS adoption (?_2 > 0), with the improved trend being sustained over time. In sharp contrast, financial stability metrics: Liquidity and CAR, suffered a significant synchronous immediate negative level shock (e.g., CAR ?_2 = -2.10**). The study concludes that IFRS adoption serves as a powerful, immediate catalyst for external credibility and profitability, but simultaneously imposes considerable transitional costs on internal stability. Policy recommendations emphasize the need for regulatory frameworks to support institutional capacity and strategically mitigate transitional risks, such as the pro-cyclicality of IFRS 9, to ensure the long-term resilience required by the banking sector's key stakeholders. This research significantly contributes to accounting and finance literature by evaluating the dual impact in the Nigerian banks' context, empirically refining the stakeholders' theory.