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Financial Ratios as Performance Measure: A Comparison of IFRS and Nigerian GAAP

Author

Listed:
  • Zayyad Abdul-Baki

    (University of Ilorin, Nigeria)

  • Ahmad Bukola Uthman

    (Al-Hikmah University, Ilorin, Nigeria)

  • Mubaraq Sanni

    (University of Ilorin, Nigeria)

Abstract

This study examines the effect of IFRS adoption on the performance evaluation of a case firm using some financial ratios selected from four major categories of financial ratios. The study was conducted through comparison of the ratios that were computed from IFRS based financial statements and Nigerian GAAP based financial statements. A One-Sample Kolmogorov-Smirnov Test was conducted to test for data normality. Mann-Whitney U test was employed in testing whether significant difference exists between the pair of ratios when the normality test showed a non-normal distribution of the data set. The result of the Mann-Whitney U test showed that there is no significant difference between the pair of ratios at 5% level of significance. It was concluded that the disclosure of IFRS compliant set of financial statements was not attributable to higher performance evaluation, through ratios, of the case firm. Rather, such disclosure could have been motivated by the capital needs theory or signaling theory.

Suggested Citation

  • Zayyad Abdul-Baki & Ahmad Bukola Uthman & Mubaraq Sanni, 2014. "Financial Ratios as Performance Measure: A Comparison of IFRS and Nigerian GAAP," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 13(1), pages 82-97, March.
    • Handle: RePEc:ami:journl:v:13:y:2014:i:1:p:82-97
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    Citations

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    Cited by:

    1. Olayinka Erin & Foluke Oduwole & Paul Olojede & Jonah Arumona, 2018. "Does International Financial Reporting Standards (IFRS) Impact Profitability Ratios of Listed Banks in Nigeria?," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 2(2), pages 79-90.
    2. Eman Ismail & Yasser Tawfik Halim & Mohamed Samy EL-Deeb, 2023. "Corporate reputation and shareholder investment: a study of Egypt's tourism listed companies," Future Business Journal, Springer, vol. 9(1), pages 1-15, December.
    3. Haruna, Dzugwahi & Apedzan Emmanuel, Kighir, 2018. "Ifrs Adoption And Shareholders' Wealth Of Deposit Money Banks In Nigeria," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 7(2), pages 16-30, December.
    4. Wafaa Salah, 2020. "The International Financial Reporting Standards and Firm Performance: A Systematic Review," Applied Finance and Accounting, Redfame publishing, vol. 6(2), pages 1-10, August.

    More about this item

    Keywords

    IFRS; financial ratios; Nigerian GAAP; capital needs theory; signaling theory;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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