Revenue Recognition Practices Under IFRS 15 and Earnings Predictability in Nigerian Telecommunication Companies

The implementation of IFRS 15 on revenue from contracts with customers has reshaped revenue recognition practices globally, yet empirical studies examining its effect on earnings predictability within the Nigerian telecommunications sector remain limited. This study investigated the impact of IFRS 15 adoption on earnings predictability among telecommunications companies listed on the Nigerian Exchange Group, covering the period from 2020 to 2024. The study was grounded in the efficient market hypothesis, which posits that high-quality earnings information is rapidly impounded into stock prices. An ex-post facto research design was employed, and the study population comprised all five listed telecommunications companies. Data were sourced from audited financial statements, notes to accounts, and analyst earnings forecasts, and were analyzed using ordinary least squares regression and Theil's inequality coefficient as a measure of forecast accuracy. Findings showed that post-IFRS 15 revenue disclosures were significantly associated with improved earnings predictability, as measured by reduced analyst forecast errors. The study also found that firms with multi-element contract portfolios demonstrated greater earnings volatility under the new standard. The study concluded that IFRS 15 adoption improves earnings predictability by enforcing more disciplined and transparent revenue allocation. It was recommended that the Financial Reporting Council of Nigeria should provide sector-specific implementation guidance for telecommunications companies to reduce compliance ambiguity.

Keywords: IFRS 15, revenue recognition, earnings predictability, telecommunications, efficient market hypothesis