An Empirical Investigation of IFRS 9 Implementation and Value Relevance of Accounting Information in Nigerian Deposit Money Banks

Abstract

Implementing the International Financial Reporting Standard nine (IFRS 9) came into effect from the 1st of January 2018, which was mandated by the International Accounting Standards Board (IASB), believing the financial crisis experience in the year 2008 was caused by the deficiency of International Accounting Standard (IAS 39), which was criticized for its backward looking and rule base. In line with this, the study seek to examine the impact of IFRS 9 on value relevance of accounting information. Data collected from the financial statement of eight (8) out of thirteen listed money deposit banks in Nigerian Stock Exchange for seven years (2018 to 2024) was analyzed. Ohlson (1995) price model was adapted, where the comparison of the Earnings per share (EPS) and Book value per share (BVPS) was analyzed using panel regression; also a post-IFRS 9 cross section yearly regression analysis was done to ascertain the level of increase or decrease of Earnings per share (EPS) and Book value per share (BVPS) in relationship to share price. The findings reveal that earnings per share is statistically insignificantly in explaining share price, suggesting a decline in its value relevance following IFRS 9 adoption. In contrast, book value per share exhibits a strong and statistically significant relationship with share price, indicating its continued importance in firm valuation. Further analysis shows that EPS was value relevant between 2018 and 2020 but lost relevance from 2021 to 2024, while BVPS remained consistently value relevant throughout the study period. The loss of value relevance of EPS may be due to increase in income volatility and estimation uncertainty under IFRS 9. It was recommended companies should reduce earnings volatility; adhere to best practices in revenue recognition and expenses matching, also they should focus on transparent and accurate asset and liability valuation to enhance investors’ confidence.