Effect of Mandatory Adoption of IFRS on Earnings Predictability of Firms in the Financial Services Sector

Main Article Content

Godwin I. Ebirien
Lillian O. Nkanbia-Davies
Gospel J. Chukwu


Aims: The paper empirically investigated the effect of mandatory adoption of International Financial Reporting Standards on earnings predictability of deposit money banks and insurance firms. 

Study Design: It adopted ex post facto research design.

Place and Duration of Study: The study was conducted in Nigeria and covered the period 2008 to 2014.

Methodology: The study used 196 firm-year observations obtained from annual reports of the deposit money banks and insurance firms quoted on the Nigerian Stock Exchange. It formulated two hypotheses and tested the hypotheses using random effect model of Generalized Least Square Method.

Results: The regression results revealed that the mandatory adoption of IFRS did not improve earnings predictability of firms in the services sector, based on earnings and cash flows. The results also showed that the earnings predictability in the post mandatory IFRS adoption period was not significantly different between DMBs and insurance firms.

Conclusions: Nigeria has relatively short IFRS experience and preparers are still contending with several evolving issues. The paper recommends sustained training for both the preparers, users and regulators so as to improve financial reporting and consequently enhance earnings predictability.

Earnings predictability, international financial reporting standard, financial services sector, Nigerian stock exchange.

Article Details

How to Cite
I. Ebirien, G., Nkanbia-Davies, L. O., & Chukwu, G. J. (2019). Effect of Mandatory Adoption of IFRS on Earnings Predictability of Firms in the Financial Services Sector. Journal of Economics, Management and Trade, 24(1), 1-12. https://doi.org/10.9734/jemt/2019/v24i130154
Original Research Article


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