Title: MODERATING EFFECT OF GOVERNANCE FACTORS ON THE RELATIONSHIP BETWEEN IFRS ADOPTION AND EARNINGS MANAGEMENT

Authors: Taibat Adebukola Atoyebi, Abdullateef Ibrahim, Yusuf Alhassan, Sylvester Onyekachi Ademu, Joseph Ilori Ajulo and Cindy Iwebuka Igba-Ujene

Abstract: This study examined the impact of International Financial Reporting Standards (IFRS) on earnings management (EM) within the Nigerian banking sector. Utilizing an ex post facto design, the study investigated the relationship between IFRS adoption and EM practices, while also analysing the moderating influences of management incentives and board characteristics of eight listed deposit money banks on the Nigerian Exchange Group (NGX) from 2001 to 2022. The study employed the Generalized Linear Model (GLM) technique and the Mann-Whitney U test for data analysis and test of robustness. The findings revealed a significant positive impact of IFRS adoption on discretionary accruals, indicating increased EM practices under the IFRS regime. However, management incentives exhibit an insignificant moderating effect, suggesting managerial remuneration may not effectively address agency problems within the Nigerian banking sector. Conversely, board characteristics, particularly the frequency of board meetings, demonstrate a significant negative impact on the relationship between IFRS adoption and EM, emphasizing the importance of active and engaged boards in corporate governance to mitigate such practices.

Keywords: IFRS, International Financial Reporting Standards, Earning Management, Board Characteristics.

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