Do Malaysian and Nigerian Accounting Standards Produce Similar Earnings Quality for Banks?
Author(s)
Mr. Onalo Ugbede , Dr. Mohd Lizam , Mr.Ahmad Kaseri , Mr. Sulaiman Mohammad Lame ,
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Abstract
Accounting standards are developed and issued by individual nations through their accounting standard setting bodies for users and preparers of financial statements, investors, commercial enterprises and regulatory agencies of government. Judgement about earnings quality is made based on accounting information contained in the financial statement. Therefore, the objective of this study is to empirically provide an evidence of the impact of Malaysian Financial Reporting Standards (MFRSs) and Nigerian Statement of Accounting Standards (NSASs) on the earnings quality of their respective banking sectors. The period of study is 2007 – 2011 with Malaysian and Nigerian banks constituting the study sample. The Jones model is modified to investigate the quality of earnings in both economies and a comparative analysis of the different country banks related accounting standard is equally made. It was discovered that Malaysian banks exhibit better earnings quality than Nigerian banks. Findings equally show that Malaysian FRSs are IFRSs compliant, thus more detailed, stricter, and contemporary and prescribe clearer rules than Nigerian SASs indicating that though significant relationship exist between accounting standards and banks earnings quality, MFRSs do not produce similar banks earnings quality with NSASs. It is therefore recommended that Nigerian government, standard setters and appropriate regulatory and supervisory bodies should, as a matter of urgency and seriousness embrace the full adoption of International Financial Reporting Standards (IFRSs) and ensure compliance with BASEL II requirements.
Keywords
Accounting standards, earnings quality, Jones model, MFRSs, NSASs, IFRSs, Banks
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