Effect of IFRS Adoption Quality on Earnings Quality of Listed Firms in Nigeria

Abstract

This study examines the effect of IFRS adoption quality on the earnings quality of listed banks in Nigeria from 2014 to 2025, with Earnings Quality (EQ) serving as the dependent variable. The specific objective was to assess how IFRS Compliance Level Index (IFRS_CLI), Auditor Type (AT), Financial Statement Restatement Frequency (FSRF), Disclosure Quality Score (DQS), and Timeliness of Financial Reporting (TFR) influence EQ. Using panel data obtained from five listed Nigerian banks and applying panel least squares regression analysis, the study found that two of the five explanatory variables had statistically significant effects on earnings quality. The empirical results revealed that Financial Statement Restatement Frequency (β = 0.5984, p = 0.0023) has a positive and significant effect on earnings quality, indicating that corrective financial reporting enhances the reliability and credibility of reported earnings. In contrast, Timeliness of Financial Reporting (β = -0.000313, p = 0.0070) shows a significant negative effect on earnings quality, suggesting that delays in financial reporting reduce the usefulness and reliability of accounting information. However, IFRS Compliance Level Index (β = 0.0927, p = 0.4371), Auditor Type (β = 0.0196, p = 0.5668), and Disclosure Quality Score (β = 0.1301, p = 0.4585) all exhibited positive but statistically insignificant relationships with earnings quality. This implies that while these factors are theoretically important in improving financial reporting quality, they do not exert a strong or measurable influence on earnings quality within the sampled firms during the study period. Descriptive statistics indicated moderate variability in IFRS adoption quality and earnings quality among the sampled banks, reflecting differences in reporting practices and governance structures. The findings suggest that earnings quality is more strongly influenced by reporting discipline (timeliness and restatement practices) than by general compliance indicators alone. It is therefore concluded that improving reporting speed and strengthening corrective financial reporting systems are critical for enhancing earnings quality in Nigerian listed banks.