International Financial Reporting Standards Adoption and Financial Reporting Information Overload: Evidence from Nigerian Banks

Abstract

The wide adoption and implementation of
International Financial Reporting Standard (IFRS)
principally hinges on the notion that it promotes the
production of high quality financial information for
investor’s decision making in the current globalized
world. However, IFRS adoption is stated to be
associated with the problem of information overload.
This paper examines this assertion within the
Nigerian banking industry. Data is generated from
the financial reports of thirteen banks quoted on the
Nigerian Stock Exchange as at 31st December, 2014,
two years pre and post-IFRS adoption. Descriptive
statistics is utilized to analyse the data and the paired
sampled t-test statistics to test the hypotheses. The
descriptive results reveal that on average, IFRS
adoption cause a 31.6% increase in the length of
financial reports with the accounting policies segment
increasing by 95.3%, income statement by 84.6%,
notes to the accounts by 70.2%, management
discussion and analysis by 23.2%, cash flow statement
by 13.3%, and statement of financial position by
9.7%. Only the others segments of the financial
reports decrease by 10%. The results of the paired ttest
shows that there is a significant difference in the
overall length of information disclosed by Nigerian
banks in the pre and post-IFRS adoption periods
implying IFRS adoption led to information over load
in the financial reports of Nigerian banks. Further
investigation reveals that notwithstanding the
increase in information disclosure, post-IFRS
reporting is more decision relevant. The paper
recommends that investors seeking investment
opportunities in the post-IFRS regime should
patronize financial analyst to guide their decision
making and the regulatory authorities especially the
Central Bank of Nigeria should discourage company
directors from disclosing unnecessary information by
regulating on the maximum number of pages in
annual reports and accounts.