Effect of International Financial Reporting Standards Adoption on Earnings Persistence and Predictability of Listed Conglomerate Companies in Nigeria

Abstract

This study investigated the effect of International Financial Reporting Standards (IFRS) adoption on earnings persistence in listed conglomerate companies in Nigeria. Despite IFRS being adopted over a decade ago, questions remain about its impact on the quality and sustainability of reported earnings in the Nigerian corporate environment. The major objective of the study was to examine whether current earnings significantly predict future earnings and whether IFRS adoption enhances earnings persistence. The study employed an ex-post facto and correlational research design within accounting positivist framework. A census of five listed conglomerate firms on the Nigerian Exchange Group was analysed over a ten-year period (2012–2021). Ordinary Least Squares (OLS) regression was used to assess the relationships between IFRS adoption, lagged earnings, firm size, and earnings persistence. The results indicated that IFRS adoption significantly enhances earnings persistence, while lagged earnings are strongly predictive of future earnings. The findings confirms that IFRS improves the reliability of financial statements, particularly under stable reporting environments. The study concludes that IFRS adoption positively impacts earnings quality and supports investor confidence through consistent financial reporting. This study recommends improved enforcement mechanisms, increased IFRS training for financial professionals, and continued investment in financial reporting infrastructure to fully realize the benefits of IFRS in emerging economies like Nigeria.