The Impact of Compliance with Nigerian Accounting Standard on Asset and Profitability of Nigeria Quoted Companies
No Thumbnail Available
Date
2011
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
The Journal of Commerce, Hailey College of Commerce, University of the Punjab, PAKISTAN
Abstract
The primary reason for standardization is to protect the interests of both shareholders and other stakeholders. The level profitability and extent to which business assets are secured, therefore become important items of concern to all stakeholders. Before standardization could be said to be effective it must protect the important items. The objective of this study, therefore, was to examine the impact that compliance have on profitability and asset value. Forty-four companies that existed before the beginning of standardization in Nigeria in 1984 and which have unbroken financial records with the Nigerian Stock Exchange, were sampled for the study. Profitability, asset and compliance data of the companies were collected from the Nigerian Stock Exchange and annual reports of companies. Pearson Product Moment and Spearman’s Rank Correlation statistics were used to test the impact of compliance, while student ‘T’ statistic was used to investigate the extent to compliance. The study showed that Nigerian companies reasonably comply with accounting standards but the level of compliance is below the international benchmark. The study also showed that compliance resulted in improved profitability and higher net-asset, but the improvements are not significant. The study therefore concluded that corporate compliance to accounting standards still leaves room for improvement and has not brought about improvement that is significant enough. The study recommended among others, that standards should be reviewed on continuous basis with the aim of ensuring that better business practices are enforced using the instrument of standardization and that standards should be better complied with by companies.
Description
Keywords
Compliance, Accounting Standards, Assets, Profitability, Nigeria Quoted Companies