Effect of International Financial Reporting Standards on Profitability of Nigerian Banks: A Case Study of Uba Plc

Abstract

The broad objective of this study is to investigate the effect of international financial reporting standards on profitability of Nigerian banks. The study is hinged on the efficient market theory which emphasizes accounting information as a major determinant in an efficient market, and obtains support from the agency theory which stipulated an agency relationship between the bank owners and the bank managers who communicate to users of financial accounting reports. The study used descriptive statistics to make comparative trend analysis of the profit before tax under GAAP and IFRS of United Bank for Africa. The study deployed clustered column bar chart and linear bar chart to analyze the trend of profit before tax under GAAP and IFRS for United Bank for Africa. The profit before tax  data were sourced from income statements of the bank for the period 2003 to 2020 which comprised of pre IFRS(2003-2009) and Post IFRS(2010-2020). Findings revealed that, overall; the IFRS adoption indicates negative insignificant effect on assets quality of deposit money banks in Nigeria. The study therefore, recommends inter-alia that Financial Reporting Council of Nigeria should partner with the CBN to provide clarity on areas of regulatory hindrance to full and effective implementation of the IFRS with regular supervisory observations.