ABSTRACT

This study examined the effect of International Financial Reporting Standards (IFRS) Implementation on Earnings Response Coefficient (ERC) of listed companies in Nigeria. The study has concerned for poor utilization of capital market, especially equity market for funding of developmental project, both public and private sector entities. The study therefore focused on the effect of IFRS Implementation on earnings response coefficient of listed companies in Nigerian and also assessed the interactive effects between IFRS provisions and investors' protection among others on the Earnings Response Coefficient of listed companies in Nigerian. This study adopted historical-descriptive research design and content analysis research designs. This was conducted using forty six listed companies in Nigerian covering the period of 6 years (2013 to 2018). The data of the study was analyzed using the Partial Least Square. The results of the cross sectional effect model show that ERC is not positively associated with IFRS implementation. This is not inclusive of the fact that IFRS implementation brings about high quality standards which is a prerequisite for high quality information, but it is not sufficient enough to induce a change in the ERC. IFRS reveals its inability to increase the decision usefulness of financial statements to be more earning oriented rather than non-earning oriented. It was discovered that investors and speculators alike pay close attention to the degree to which current period earnings shocks persist in the future, and this outcome propels the IFRS compliance to enhance a high earnings response coefficient of firms in the stock market. ERC also improves with the moderating effect of a strong investors’ protection in an IFRS environment, while ERC is also inversely and significantly affected by the interactive effect between beta and IFRS implementation. It is therefore recommended that firms listed in the Nigerian stock exchange should as a result of necessity improve on their investors' protection in order to promote a high earnings response coefficient under an IFRS environment, and that the financial reports of listed companies in Nigerian should be designed to improve the information contents of accounting earnings in order to include inherent socio-economic risk, full disclosure of net income, past and prospective earnings.