Exploring the Adoption of International Financial Reporting Standards by Quoted Companies in Nigeria and Investor Confidence

This study explores the relationship between the adoption of International Financial Reporting Standards (IFRS) by companies listed on the Nigerian Exchange Group and subsequent changes in investor confidence as measured by foreign portfolio investment inflows and stock market liquidity indicators. Nigeria mandated IFRS adoption for quoted companies from 2012, with the expectation that improved financial reporting quality, transparency, and comparability with global peers would attract international portfolio investors and reduce the cost of capital. The research employs a secondary data design drawing on financial statement data, market capitalisation statistics, and foreign portfolio investment flow data from the Securities and Exchange Commission and the Nigerian Exchange Group for the period 2010 to 2023. Event study methodology and regression analysis are used to measure investor response to IFRS adoption. The theoretical framework draws on the signalling theory of financial reporting and the information asymmetry theory of capital markets. The study examines changes in bid-ask spreads, trading volumes, earnings quality metrics, and foreign investor shareholding proportions following IFRS adoption, controlling for macroeconomic factors. Findings are expected to reveal that IFRS adoption improved earnings quality and reduced information asymmetry, contributing to modest increases in foreign portfolio participation, though political risk and governance concerns remained overriding investment deterrents. Recommendations are directed at regulators, the Financial Reporting Council of Nigeria, and listed companies on sustaining IFRS compliance quality as an investor relations instrument. Keywords: IFRS, financial reporting, investor confidence, Nigerian Exchange, portfolio investment