Journals Information
Universal Journal of Accounting and Finance Vol. 13(1), pp. 1 - 14
DOI: 10.13189/ujaf.2025.130101
Reprint (PDF) (835Kb)
The Influence of IFRS Adoption on FDI and Economic Growth: Evidence from Nigeria
Magdalene Enruchi Williams *
Department of Accounting, Rivers State University, Nigeria
ABSTRACT
This research study analyzes the influence of the adoption of International financial reporting standards (IFRS) on foreign direct investments (FDI) inflows and economic growth in Nigeria. Institutional quality indicators are incorporated into the study to assess their mediating impact on the relationship between the independent and dependent variables. FDI inflows and economic growth are used as dependent variables in the study, while the independent variable is IFRS adoption. Time series data spanning from 2004 to 2022 is used to obtain the research findings. Multivariate analysis of covariance (MANCOVA) is used to test for the difference in FDI inflows and economic growth during the pre-IFRS and post-IFRS adoption periods. Mediating analysis indicated a significant positive effect of IFRS adoption on economic growth, with institutional variables influencing the relationship. Based on the research findings of this study, IFRS adoption positively contributes to economic growth by fostering the private domestic businesses and investments within the country. While, a negative influence of IFRS adoption on FDI inflows was revealed in the study findings with institutional quality factors playing a significant mediating role. This study supports the view that though IFRS adoption is expected to foster FDI inflows, in countries with weak institutional qualities its influence proves to be minimal. Adequate disclosures under IFRS are essential for promoting transparency, a critical factor currently lacking in many Nigerian companies. Further, IFRS is aimed at enhancing the value relevance of accounting information thereby ensuring international comparability, providing quality financial information and allowing both foreign and domestic investors rely on financial statements in making investing and economic decisions. However, the findings of this study prove that IFRS adoption in Nigeria has not been successful in bringing value relevant financial information. Therefore, it is vital to establish solid institutional and corporate governance structures to enforce compliance with IFRS in financial statement preparation, reflecting actual company earnings and financial performance to encourage increase in FDI inflows and economic growth.
KEYWORDS
IFRS Adoption, FDI Inflows, Economic Growth, MANCOVA
Cite This Paper in IEEE or APA Citation Styles
(a). IEEE Format:
[1] Magdalene Enruchi Williams , "The Influence of IFRS Adoption on FDI and Economic Growth: Evidence from Nigeria," Universal Journal of Accounting and Finance, Vol. 13, No. 1, pp. 1 - 14, 2025. DOI: 10.13189/ujaf.2025.130101.
(b). APA Format:
Magdalene Enruchi Williams (2025). The Influence of IFRS Adoption on FDI and Economic Growth: Evidence from Nigeria. Universal Journal of Accounting and Finance, 13(1), 1 - 14. DOI: 10.13189/ujaf.2025.130101.