INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) ADOPTION AND KEY FINANCIAL RATIOS: INSIGHT FROM LISTED BANKS IN NIGERIA

Abstract

Financial ratio is one of the performance measure used by investors to determine the viability of a firm. In view of this assertion, this paper investigates the effects of IFRS on key financial ratios of 11 listed banks in Nigeria. The study addresses the research hypotheses by comparing the key financial ratios computed under the NGAAP for three year period from 2009-2011 and three year period from 2013-2015 under IFRS . Profitability ratio, short term solvency ratio, long term solvency ratio and investment ratio were used as a proxy for key financial ratios. The study used Kolmogorov-Smirnov test and Mann Whitney U-test as a statistical method to analyze the data. The findings show that NGAAP has a higher mean score in terms of long term solvency ratios (4.94 > 2.25) and investment ratios (4.03 > 4.02) while IFRS reveals a higher mean score for profitability ratios (4.54 > 297) and short term solvency ratios (4.52 > 3.02). The finding implies that neither IFRS nor the NGAAP provided a higher performance of ratios. Therefore, mixed results obtained from the study. The research recommends that investors and financial analyst should pay particular attention to all financial ratios under this IFRS