The impact of accounting reform on accounting quality: Evidence from Nigeria

The effectiveness of International Financial Reporting Standards (IFRS) is dependent on the strength of enforcement of accounting standards in a given country. This study explores the implications of the adoption of IFRS in Nigeria after the enforcement of accounting standards was strengthened. The strengthening of accounting standards enforcement, and the subsequent adoption of IFRS in Nigeria, was recommended by the World Bank to improve the country's regulatory outlook after a capital market crisis in 2007/2008 that was triggered by widespread accounting irregularities. Results indicate that accounting quality declined in Nigeria following the adoption of IFRS; while earnings management increased, timely loss recognition and earnings persistence reduced. Our study contributes to the burgeoning literature on IFRS adoption and concludes that the effect of IFRS adoption is contextual. Therefore, accounting regulatory institutions operating in a similar context to Nigeria should localize IFRS.