ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS AND FINANCIAL PERFORMANCE OF MULTINATIONAL COMPANIES IN NIGERIA

Abstract

This study reviewed literature on the effect of International Financial Reporting Standards adoption on financial performance of multinational companies in Nigeria. The review's two main streams of emphasis are:First, to ascertain whether there are notable differences between the financial performance measurements of multinational companies operating in Nigeria that are prepared using IFRS financial statements and local GAAP. Second, to assess whether financial performance indicators created using IFRS financial statements show better performance than those using local GAAP. Results from the analysis of the literature revealed that IFRS financial ratios indicate better performance than local GAAP financial ratios. Further research revealed that, no appreciable differences between the financial performance indicators (financial ratios) provided for multinational corporations operating in Nigeria under local GAAP and IFRS financial statements. The study concludes that, the more a company adheres to IFRS disclosure requirements, the more investors are drawn to invest in it, consequently enhancing its financial performance (return on capital employed). The study recommended that multinational companies should be concerned, among other things, with the disclosure of relevant information at the lowest feasible cost in order to maintain the potential good effect of required and voluntary financial performance disclosure