DOES THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) 15 IMPROVE EARNINGS PERSISTENCE? THE NIGERIAN EXPERIENCE
Abstract
IFRS 15 (Revenue from Contracts with Customers) was issued in
2014 and became effective on 1 January 2018 to address the
limitations of IAS 11 (Construction Contracts) and IAS 18 (Revenue). However, whether the adoption of IFRS 15 has improved financial
reporting outcomes, particularly earnings persistence, remains
largely unresolved empirically. This study therefore examined the
impact of IFRS 15 adoption on earnings persistence in listed
Nigerian firms. Using secondary data obtained from S&P Capital IQ
and annual reports, the study analysed 103 firms listed on the
Nigerian Exchange (NGX) selected purposively from a population of
159 firms based on data availability. The study period covered
2012–2023, divided into the pre-IFRS 15 period (2012–2017) and
post-IFRS 15 period (2018–2023). Operating earnings persistence
was used as the primary proxy for earnings persistence, while net
profit persistence served as a robustness measure. The Mann– Whitney U test was employed for hypothesis testing. The results
revealed a statistically significant difference in operating earnings
persistence between the pre-IFRS 15 and post-IFRS 15 regimes (U = 212,777.00; z = 3.477; p = 0.001). The findings were robust to
alternative earnings persistence measures. The study concludes
that IFRS 15 significantly influences earnings persistence in Nigeria
and recommends further review and clarification of the standard
by the FRC and IASB to strengthen reporting quality.
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Published in JOURNAL OF BUSINESS & ECONOMY
ISSN: 2808-5428
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