The Effectiveness of Sas and Ifrs Based Financial Reports: Evidence from the Healthcare Sector
DOI:
https://doi.org/10.61143/umyu-jafr.2(1)2021.002Keywords:
IFRS, Financial Performance, Local GAAP, SASAbstract
Since the adoption of IFRS the world over, many studies have been conducted by researchers on the effectiveness of IFRS compared to local GAAPS. This study adds to the existing literature by investigating the effectiveness of SAS and IFRS based financial reports. The study specifically reviews the financial performance of Health care firms in Nigeria under SAS and IFRS. Financial performance is proxied by return on equity (ROE) as dependant variable while long term solvency ratio represented by debt to equity ratio (DER) and debt to asset ratio (DAR) and investment ratio represented by earnings per share (EPS) and dividend per share (DPS) were used as independent variables with sales as control variable. Data was sourced from the financial statements of the health care firms covering period of 14 years (2005-2018) divided into 7 years each of SAS and IFRS regimes. Result show that SAS was better and more effective in the area of investment ratio compared to IFRS. However, for the long-term solvency, it was mixed result with debt to asset ratio (DAR) better under SAS but debt to equity ratio (DER) more effective under IFRS. Results of SAS and IFRS models were subjected to Akaike’s information criteria and Bayesian information criteria test of comparability which indicate that model SAS was better when compared with IFRS regime. Therefore, based on the findings, the study concluded that the introduction of IFRS has not significantly impacted on the financial performance of firms under health care sector in Nigeria.
Metrics
References
Abdul-Baki, Z., Uthman, A. B., & Sanni, M. (2014). Financial ratios as performance measure: A comparison of IFRS and Nigerian GAAP. Journal of Accounting and Management Information systems., Vol. 13(10; 82-97.
Abdullahi, A., Abubakar, M. Y., & Ahmad, S. S. (2017). International Financial Reporting Standards (IFRS) adoption and Oil & Gas Companies in Nigeria. International Journal of Accounting and Economic Studies, Vol. 5(2): 46-149. https://doi.org/10.14419/ijaes.v5i2.8209
Adebipe, U., & Ekwere, R. E. (2015). IFRS Adoption and Value Relevance of Financial Statements of Nigerian Listed Banks. International Journal of Finance and Accounting, 29-42.
Adejola, A. D. (2011). IFRS Practical Implementation guide for preparation and presentation of financial statements. Abuja.: White Knight Consulting Ltd.
Agir, P. A. (2017). A comparative Analysis of the Effect of IFRS Adoption on Value Relevance of Accounting Information in an Emerging Economy: A Focus on Listed Deposit Money Banks in Nigeria. International Journal of Banking and Finance Research, Vol. 3(2): 76-99.
Akaike, H. (1974). A new look at the statistical model identification:. IEEE Transactions on Automatic Control, 19: 716-723. https://doi.org/10.1109/TAC.1974.1100705
Akinleye, G. T. (2016). Effect of International Financial Reporting Standards (IFRS) adoption on the performance of Money Deposit Banks in Nigeria. European Journal of Business, Economics and Accountancy, vol. 4(4): 87-95.
Amaefule, L. I., Onyekpere, U. R., & Kalu, E. O. (2018). IFRS and Manufacturing Firms Financial Performance in Nigeria. International Journal of Accounting and Taxation, Vol. 6(1): 102-114. https://doi.org/10.15640/ijat.v6n1a9
Appiah, K. O., Vitor, D. A., Mireku, K., & Ahiagbah, C. (2016). Compliance with International Financial Reporting Standards: The case of listed firms in Ghana. Journal of Financial Reporting and Accounting, Vol. 14(1): 131-156. https://doi.org/10.1108/JFRA-01-2015-0003
Armstrong,, C., Barth,, M., Jagolinzer, , A., & Riedi, , E. (2010). Market Reaction to the Adoption of IFRS in Europe. The Accounting Review, 85 (1) , 31-61. https://doi.org/10.2308/accr.2010.85.1.31
Blanchette, M., Racicot, F. E., & Girard, J. Y. (2011). The Effects of IFRS on Financial ratios: early evidence in Canada. Ottawa.: Cerified General Accountants Association of Canada.
Cardwell, C., & Karri, R. (2005). Organizational Governance and Ethical Choices: A Conventional Approach to Building Trust. Journal of Business Ethics, Vol 58 (1): 249-259. https://doi.org/10.1007/s10551-005-1419-2
Davies, J., Schoorman, F., & Donaldson, L. (1997). Towards a Stewardship Theory of Management. Academy of Management Review, Vol 22(1): 20-47. https://doi.org/10.5465/amr.1997.9707180258
Donwa, P. A., Mgbame, C. O., & Idemudia, N. G. (2015). Effect of IFRS on Accounting Ratios in Nigeria Oil and Gas Companies (A Comparative Analysis). Journal of Accounting and Financial Management, Vol 1(8): 67-76.
Freeman R.E. (1984). Strategic Management: A stakeholder Approach. Boston, USA: Pitman Press.
Herbert, W. E., Tsegba, I. N., Ohanele, A. C., & Anyahara, I. O. (2013). Adoption of International Financial Reporting Standards (ifrs): insights from Nigerian Academics and Professionals. Research Journal of Finance and Accounting, Vol. 4(6): 123-135.
Hoshino, Y. (2017). Effect of IFRS Adoption on Corporate Performance Measurement: Analysis of Japanese Manufacturing Companies. Universal Journal of Accounting, Vol. 5(4 ):78-90. https://doi.org/10.13189/ujaf.2017.050402
IASB. (2010). The Conceptual Framework for Financial Reporting. London: IASB.
Ibanichuka, E. L., & Asukwo, I. S. (2018). IFRS adoption and Financial Performance of petroleum Marketing activities in Nigeria. Internationla Journal of Advanced Academic Reserach and Development, Vol. 4(2).
Jinadu, O., Oluwafemi, S., Soyinka, M., & Akanfe, K. (2017). Effects of International Financial Reporting Standards (IFRS) on Financial Statements Comparability of Companies. Journal of Humanities Insights, Vol 1 (1): 12-16.
Lantto, A.-M., & Sahlstrom, P. (2009). Impact of International Financial Reporting Standards adoption on key Financial Ratios. Journal of Accounting & Finance, Vol 49(2) 341-361. https://doi.org/10.1111/j.1467-629X.2008.00283.x
Masud, B. (2013). Effects of IFRS adoption on the financial reports of Nigerian listed entities: The case of oil and gas companies. A Multidisciplinary Journal of Global Macro Trends: The Macrotheme Review, 2(7), 9-26.
Masud, B. (2015). Effects of IFRS adoption on the Financial statements of Nigerian listed entities: the case of Oil & Gas Companies. U.K: Unpublished PhD thesis submitted to the Dundee Business School, Abertay University.
Ogiedu, K. O., Erhagbe, E., & Ibadin, M. (2009). Mangerial Accounting & Finance. Benin: Mindex.
Okoye, E. I., & Nwoye, U. T. (2018). IFRS Compliance Appraisal: Evidence from Nigeria and Ghana. Academic Journal of Economic Studies, Vol. 4 (4)19-27.
Punda, P. (2011). The Impact of International Financial Reporting Standards (IFRS) adoption on Key Financial Ratios-Evidence from the Uk. United Kingdom: Aarbus School of Business, Masters Thesis.
Raftery, A. (1995). Bayesian Model Selection in Social Research, Vol 25 of Sociological Methodology 111-163. Oxford: Blackwell: P. V. Marsden. https://doi.org/10.2307/271063
Sakamoto, Y., Ishigoro, M., & Kitagawa, G. (1986). Akaike Information Criterion Statistics. Dordrecht, The Netherlands: Reidel.
Salah, W., & Abdel-Salam, A. (2018). The Effect of International Financial Reporting Standards on Financial Reporting Quality. Athens Journal of Business and Economics, Vol. X. https://doi.org/10.30958/ajbe.5-3-3
Schwarz, G. (1978). Estimating the dimention of a model. Annals of Statistics, Vol 6, 461-464. https://doi.org/10.1214/aos/1176344136
Taiwo, F., & Adejare, A. (2014). Empirical Analysis of the Effect of International Financial Reporting Standards (IFRS) Adoption on Accounting Practices in Nigeria. Archives of Business Reasearch, Vol. 2 (2): 1-14. https://doi.org/10.14738/abr.22.43
Tanko, M. (2012). The Effects of IFRS adoption on the Performance of Firms in Nigeria. Journal of Administarion and Economic Science, Vol 5 (2): 133-157.
Umobong, A. A. (2015). IFRS adoption and Firms performance: A comparative analysis of quoted Food and Beverages Manufacturing firms in Nigeria. European Journal of Accounting, Auditing and Finance Research, Vol. 3 (8): 70-83.
Yahaya, K. A., Fagbemi, T. O., & Oyeniyi, K. K. (2015). Effect of Financial Reporting Standards on the Financial Statements of NIgerian Banks. Journal of Agricultural Economics, Environmental and Social Sciences, Vol. 1 (1): 18-29.
Yeboah, M., & Tackas, A. (2018). The Effect of IFRS Adoption and Corporate Performance: Evidence from South Africa. WSEAS TRANSACTIONS on BUSINESS and ECONOMICS, Vol 15, E-ISSN: 2224-2899.
Zakari, M. (2017). International Financial Reporting Standards (IFRS) adoption and its impact on financial reporting: Evidence from listed Nigeria Oil & Gas companies. Asian Journal of Finance and Accounting, Vol 9 (1). https://doi.org/10.5296/ajfa.v9i1.11407
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2023 UMYU Journal of Accounting and Finance Research
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
