International financial reporting standards and stock market behaviour: An emerging market experience

Abstract

This paper examined the impact of IFRS on stock market behaviour in the financial and consumer goods sector of the Nigerian economy. The study addresses the research questions by using a sample of 52 selected listed companies (30-financial sector and 22-consumer goods sector) on the Nigeria Stock Exchange. Secondary data source was used to investigate the impact of IFRS adoption on stock market behaviour. The methods used in analysing the impact of IFRS on stock market behaviour were General Linear Model (GLM) and Fixed Effects Model (FEM). Findings from the study show that IFRS adoption has improved the trading volume activities of listed firms in Nigeria. It equally observes that there is no significant relationship between IFRS adoption and stock price informativeness. This study recommends that regulatory bodies in the country should ensure that the companies listed on the Stock Exchange comply strictly with the IFRS implementation because this will help the investors of those companies have relevant information regarding stock market indices. Also, there is a need for the stock market to be efficient so that there will be easy access to information on the stock market on a timely basis so that investors can take a timely and prompt decision.