INTERNATIONAL FINANCIAL REPORTING STANDARDS VALUE RELEVANCE AND FIRMS ATTRIBUTES: LESSON FROM SELECTED NIGERIAN DEPOSIT MONEY BANKS

Oyeleye K. W*1, Kolawole S. A*2, Jimoh A. A*3, Atolagbe M. B *4, Asha O.F*5

Abstract

This study examined the effect of International Financial Reporting Standards (IFRS) value relevance on the firm attributes of selected Nigerian Deposit Money Banks. The study employed Market Price per Share (MPS) as the dependent variable, while Earnings per Share (EPS), Book Value per Share (BVPS), Cash Flow per Share (CFPS), Firm Size (FSIZE), and Firm Age (FAGE) served as the explanatory variables. Data were analyzed using Principal Component Analysis (PCA), Pearson Product Moment Correlation, and Ordinary Least Squares (OLS) regression analysis. The Principal Component Analysis revealed that Earnings per Share, Cash Flow per Share, and Firm Age constituted the major components of IFRS value relevance, jointly explaining 71.07% of the total variation among the variables. The correlation analysis showed that Market Price per Share had a strong positive relationship with Earnings per Share (r = 0.751) and a moderate positive relationship with Book Value per Share (r = 0.497), while weak relationships were observed with Cash Flow per Share (r = 0.022), Firm Size (r = –0.035), and Firm Age (r = 0.234). The regression results indicated that the model explained approximately 96.3% of the variations in Market Price per Share (R² = 0.963). Earnings per Share (β = 8.3478, p < 0.05) and Book Value per Share (β = 1.1913, p < 0.05) exerted significant positive effects on Market Price per Share, whereas Cash Flow per Share, Firm Size, and Firm Age had positive but statistically insignificant effects. The study concluded that IFRS adoption has enhanced the value relevance of accounting information among selected Nigerian Deposit Money Banks, particularly through improvements in earnings and book value information. It was therefore recommended that bank management should sustain full compliance with IFRS disclosure requirements to improve the credibility and comparability of financial reports.