Does IFRS Implementation Influence Sustainability Reporting in Nigeria?

Unenwojo Folaolurin Dan-Laka; Daniel Temitope Laka; Daniel O. Gbegi

doi:10.26686/aafj.v3i1.9736

Authors

Unenwojo Folaolurin Dan-Laka Federal University of Agriculture
Daniel Temitope Laka Federal University of Agriculture
Daniel O. Gbegi Federal University of Kashere

DOI:

https://doi.org/10.26686/aafj.v3i1.9736

Keywords:

IFRS, Sustainability Reporting, Economic, Environmental, Social

Abstract

Purpose: Upon the mandatory implementation of the International Financial Reporting Standards (IFRS) in 2012, Nigeria seems contented as no specific regulation has been set up mandating firms to comply with sustainability reporting. Thus, this study examines whether IFRS implementation influences the disclosure level of the three aspects of sustainability (economic, environmental, and social).

Design/methodology/approach: The hypotheses are analysed using the paired samples t-test; purposive sampling technique is adopted in selecting seven (7) companies from the oil and gas industry. These seven companies have a complete annual report on the Nigerian Stock Exchange for the period of twelve (12) years, from 2006 to 2017 (6 years pre-IFRS and 6 years post-IFRS) and are measured by scoring index based on disclosure indicators selected from Global Reporting Initiative guidelines 2016.

Findings: This research establishes that IFRS implementation improves sustainability reporting, as the disclosure level of all three aspects of sustainability reporting increases post-IFRS implementation. However, the varying disclosure level amongst the three aspects suggests that IFRS implementation may not be enough.

Originality/value: This study is original in that it considers sustainability reporting in Nigeria from the standpoint of IFRS implementation. Also, unlike most sustainability studies which rely on legitimacy theory, this study anchor on reputation theory.

Downloads

Download data is not yet available.

Author Biographies

Unenwojo Folaolurin Dan-Laka, Federal University of Agriculture

Department of Accounting and Finance, Federal University of Agriculture, Makurdi, Benue State, Nigeria.

Daniel Temitope Laka, Federal University of Agriculture

Department of Accounting and Finance, Federal University of Agriculture, Makurdi, Benue State, Nigeria.

Daniel O. Gbegi, Federal University of Kashere

Department of Accounting and Business Administration, Federal University of Kashere, Gombe State, Nigeria.

References

Agnihotri, A. (2014) 'Corporate reputation based theory of choice between organic, hybrid and inorganic growth strategies', Corporate Communications: An International Journal, 19(3), pp. 247–259. https://doi.org/10.1108/CCIJ-11-2012-0080. DOI: https://doi.org/10.1108/CCIJ-11-2012-0080

Akisik, O. and Gal, G. (2011) 'Sustainability in businesses, corporate social responsibility, and accounting standards: An empirical study', International Journal of Accounting and Information Management, 19(3), pp. 304–324. https://doi.org/10.1108/18347641111169287. DOI: https://doi.org/10.1108/18347641111169287

Al-Shaer, H. (2020) 'Sustainability reporting quality and post-audit financial reporting quality: Empirical evidence from the UK', Business Strategy and the Environment, 29(6), pp. 2355–2373. https://doi.org/10.1002/bse.2507. DOI: https://doi.org/10.1002/bse.2507

Ankarath, N. et al. (2010) Understanding IFRS Fundamentals. Hoboken, New Jersey: John Wiley & Sons, Inc.

Asaolu, T. O. et al. (2011) 'Sustainability Reporting in the Nigerian Oil and Gas Sector', in Proceedings of the Environmental Management Conference, Federal University of Agriculture, Abeokuta, Nigeria, 2011 Sustainability.

Bebbington, J., Larrinaga-González, C. and Moneva-Abadía, J. M. (2008) 'Legitimating reputation/the reputation of legitimacy theory', Accounting, Auditing and Accountability Journal, 21(3), pp. 371–374. https://doi.org/10.1108/09513570810863969. DOI: https://doi.org/10.1108/09513570810863969

Beredugo, S. B. and Mefor, I. P. (2012) 'The Impact of Environmental Accounting and Reporting on Sustainable Development in Nigeria', Research Journal of Finance and Accounting, 3(7), pp. 36–43. https://doi.org/10.5539/ijbm.v7n20p36. DOI: https://doi.org/10.5539/ijbm.v7n20p36

Bondy, K. and Jackson, G. (2009) Isomorphism in the Practice of Corporate Social Responsibility : Evidence of an Institution and its Decline.

Bowers, T. (2010) 'From Image to economic value: a genre analysis of sustainability reportin', Corporate Communications: An International Journal, 15(3), pp. 249–262. https://doi.org/10.1108/13563281011068113 DOI: https://doi.org/10.1108/13563281011068113

Cherepanova, V. (2017) 'A Case for International Financial Reporting Standard on Sustainability: A Critical Perspective', Journal of Management and Sustainability, 7(2), p. 78. https://doi.org/10.5539/jms.v7n2p78. DOI: https://doi.org/10.5539/jms.v7n2p78

Cho, C. H. et al. (2015) 'Organized hypocrisy, organizational façades, and sustainability reporting', Accounting, Organizations and Society. Elsevier Ltd, 40, pp. 78–94. https://doi.org/10.1016/j.aos.2014.12.003. DOI: https://doi.org/10.1016/j.aos.2014.12.003

Christensen, H. B., Hail, L. and Leuz, C. (2019) 'Adoption of CSR and Sustainability Reporting Standards: Economic Analysis and Review', SSRN Electronic Journal, (August). https://doi.org/10.2139/ssrn.3427748. DOI: https://doi.org/10.2139/ssrn.3427748

Christofi, A., Christofi, P. and Sisaye, S. (2012) 'Corporate sustainability: Historical development and reporting practices', Management Research Review, 35(2), pp. 157–172. https://doi.org/10.1108/01409171211195170. DOI: https://doi.org/10.1108/01409171211195170

Dobre, E., Stanila, G. and Brad, L. (2015) 'The Influence of Environmental and Social Performance on Financial Performance: Evidence from Romania's Listed Entities', Sustainability, 7(3), pp. 2513–2553. https://doi.org/10.3390/su7032513. DOI: https://doi.org/10.3390/su7032513

Ghanbari, M. et al. (2016) 'PAT ( Positive Accounting Theory ) and Natural Science', 10(2), pp. 177–182.

Global Reporting Initiative (2016) 'Consolidated set of GRI'.

GRI Global Reporting Initiative (2015) Sustainability Reporting Guidelines. Available at: www.globalreporting.org.

Hahn, R. and Kühnen, M. (2013) 'Determinants of sustainability reporting: A review of results, trends, theory, and opportunities in an expanding field of research', Journal of Cleaner Production, pp. 5–21. https://doi.org/10.1016/j.jclepro.2013.07.005. DOI: https://doi.org/10.1016/j.jclepro.2013.07.005

Harvey, W. et al. (2017) 'Lens or prism? How organisations sustain multiple and competing reputations', European Journal of Marketing, 51(4), pp. 1–43. https://doi.org/10.1108/EJM-03-2016-0122 DOI: https://doi.org/10.1108/EJM-03-2016-0122

Ioannou, I. and Serafeim, G. (2011) The Consequences of Mandatory Corporate Sustainability Reporting, SSRN. https://doi.org/10.2139/ssrn.1799589. DOI: https://doi.org/10.2139/ssrn.1799589

Khaveh, A. et al. (2012) 'Voluntary Sustainability Disclosure, Revenue, and Shareholders Wealth - A Perspective from Singaporean Companies', Business Management Dynamics, 1(9), pp. 6–12. https://doi.org/10.52283/NSWRCA.AJBMR.20120112A04 DOI: https://doi.org/10.52283/NSWRCA.AJBMR.20120112A04

Kılıç, M. and Kuzey, C. (2018) Factors Influencing Sustainability Reporting: Evidence from Turkey, SSRN. https://doi.org/10.2139/ssrn.3098812. DOI: https://doi.org/10.2139/ssrn.3098812

Kothari, C. (2004) Research methodology: methods and techniques. 2nd edn, New Age International. 2nd edn. New age international limited, publisher. doi: http://196.29.172.66:8080/jspui/bitstream/123456789/2574/1/Research%20Methodology.pdf.

Kouki, A. (2018) 'IFRS and value relevance : A comparison approach before and after IFRS conversion in the European countries', Journal of Applied Accounting Research, 19(1), pp. 60–80. https://doi.org/10.1108/JAAR-05-2015-0041. DOI: https://doi.org/10.1108/JAAR-05-2015-0041

Kwaghfan, A. (2015) Impact of Sustainability Reporting on Corporate Performance of Selected Quoted Companies in Nigeria. University of Nigeria, Enugu Campus.

Kythreotis, A. (2014) 'Measurement of financial reporting quality based on IFRS conceptual framework's fundamental qualitative characteristics', European Journal of Accounting, Finance & Business, 2(3), pp. 4–29. https://doi.org/10.4316/EJAFB.2014.231 DOI: https://doi.org/10.4316/EJAFB.2014.231

Lanis, R. and Richardson, G. (2013) 'Corporate social responsibility and tax aggressiveness: A test of legitimacy theory', Accounting, Auditing and Accountability Journal, 26(1), pp. 75–100. https://doi.org/10.1108/09513571311285621. DOI: https://doi.org/10.1108/09513571311285621

Lee, W. J. (2019) 'Toward sustainable accounting information: Evidence from IFRS adoption in Korea', Sustainability (Switzerland), 11(4), pp. 1–17. https://doi.org/10.3390/su11041154. DOI: https://doi.org/10.3390/su11041154

Lemus, E. (2016) 'The Importance of CSR in Financial Reporting Standards', Global Journal of Management and Business Research: D Accounting and Auditing, 16(2). Available at: https://www.duo.uio.no/bitstream/handle/10852/26258/Voje_Master.pdf?sequence=11.

Martínez-Ferrero, J., Garcia-Sanchez, I. M. and Cuadrado-Ballesteros, B. (2015) 'Effect of financial reporting quality on sustainability information disclosure', Corporate Social Responsibility and Environmental Management, 22(1), pp. 45–64. https://doi.org/10.1002/csr.1330. DOI: https://doi.org/10.1002/csr.1330

Negash, M. (2012) 'IFRS and environmental accounting', Management Research Review, 35(7), pp. 577–601. https://doi.org/10.1108/01409171211238811. DOI: https://doi.org/10.1108/01409171211238811

Nnamani, J. N., Onyekwelu, U. L. and Ugwu, O. K. (2017) 'Effect of sustainability accounting and reporting of financial performance of firms in Nigeria brewery sector', European Journal of Business and Innovation Research, 5(1), pp. 1–15.

Nwobu, O. A. (2017) Determinants of corporate sustainability reporting in selected companies in Nigeria.

Nwobu, O. A., Owolabi, A. A. and Iyoha, F. O. (2017) 'Sustainability reporting in financial institutions: a study of the Nigerian banking sector', Journal of Internet Banking and Commerce, 22(S8), pp. 1–15.

Okwuosa, I. and Amaeshi, K. (2018) 'Sustainability reporting and the professional accountant in Nigeria'.

Olayinka, M. et al. (2014) 'Firms ' performance and corporate social disclosures: cross-sectional evidence of Nigerian firms', Int. J. Management Practice, 7(4), pp. 341–365. https://doi.org/10.1504/IJMP.2014.065231 DOI: https://doi.org/10.1504/IJMP.2014.065231

Owolabi, F. et al. (2016) 'Assessment of Sustainability Reporting in Nigerian Industrial Goods Sector', 3rd International Conference on African Development, 3, pp. 383–386.

Pérez-Calero, L., Villegas, M. del M. and Barroso, C. (2016) 'A framework for board capital', Corporate Governance (Bingley), 16(3), pp. 452–475. https://doi.org/10.1108/CG-10-2015-0146. DOI: https://doi.org/10.1108/CG-10-2015-0146

Saleh, K. (1993) 'Environmental Accounting for Sustainable Growth and Development with Special Reference to a System of Integrated Environmental and Economic Accounting (SEEA): The Indonesian Experience

Senkl, D. (2010) Essays on Earnings Quality and Corporate Social Responsibility Reporting. Available at: http://ediss.sub.uni-hamburg.de/volltexte/2017/8473/pdf/Dissertation.pdf.

Tsalavoutas, I. and Dionysiou, D. (2014) 'Value relevance of IFRS mandatory disclosure requirements', Journal of Applied Accounting Research, 15(1), pp. 22–42. https://doi.org/10.1108/JAAR-03-2013-0021. DOI: https://doi.org/10.1108/JAAR-03-2013-0021

Watts, P. and Holme, Lord (1999) Corporate Social Responsibility: Making Expectations Meet, World Business Council for Sustainability Development. doi: 1998.

Weerathunga, P. R. et al. (2020) 'Do the IFRS promote corporate social responsibility reporting? Evidence from IFRS convergence in India', Journal of International Accounting, Auditing and Taxation. Elsevier Inc., 40, p. 100336. https://doi.org/10.1016/j.intaccaudtax.2020.100336. DOI: https://doi.org/10.1016/j.intaccaudtax.2020.100336

Žák, M. (2009) Sustainability Accounting and Reporting (at Macroeconomic and Microeconomic level). https://doi.org/10.1007/978-1-4020-4974-3. DOI: https://doi.org/10.1007/978-1-4020-4974-3