Abstract

Accounting policy changes have become an important aspect of corporate financial reporting due to their influence on the measurement, recognition, presentation, and disclosure of financial information. Accounting policies refer to the specific principles, bases, conventions, rules, and practices adopted by organizations in preparing and presenting financial statements in accordance with applicable accounting standards. Changes in accounting policies may arise from the adoption of new International Financial Reporting Standards (IFRS), amendments to existing standards, regulatory requirements, changes in business operations, or management decisions aimed at improving the relevance and reliability of financial reporting. While accounting policy changes are expected to enhance comparability, transparency, and faithful representation of financial statements, they may also affect reported earnings, asset valuation, liabilities, equity, and key financial performance indicators. In Nigeria, listed companies are required to comply with International Financial Reporting Standards (IFRS) as regulated by the Financial Reporting Council of Nigeria (FRCN), the Securities and Exchange Commission (SEC), and the Nigerian Exchange Group (NGX). The increasing frequency of amendments to accounting standards, coupled with evolving business environments and stakeholder expectations, has heightened the need for organizations to effectively manage accounting policy changes. However, the implementation of new accounting policies often presents challenges such as increased compliance costs, system modifications, staff training requirements, transitional adjustments, and potential volatility in financial performance. Although previous studies have examined IFRS adoption and financial reporting quality, empirical evidence regarding the effect of accounting policy changes on the financial performance of listed companies in Nigeria remains limited and inconclusive. Against this background, this study investigates the effect of accounting policy changes on the financial performance of listed companies in Nigeria. The study is anchored on Positive Accounting Theory, Agency Theory, and Institutional Theory. Positive Accounting Theory posits that managers select accounting policies based on economic incentives, contractual obligations, and organizational objectives, which may influence reported financial performance. Agency Theory explains that transparent and appropriate accounting policy changes reduce information asymmetry between managers and shareholders, thereby enhancing accountability and decision-making. Institutional Theory argues that organizations adopt accounting policy changes in response to regulatory requirements, professional norms, and institutional pressures to maintain legitimacy and stakeholder confidence. Collectively, these theoretical perspectives provide a comprehensive framework for explaining the relationship between accounting policy changes and the financial performance of listed companies in Nigeria. The study adopts a quantitative research design using a structured questionnaire administered to chief financial officers, finance managers, financial controllers, accountants, internal auditors, external auditors, audit committee members, and other personnel responsible for financial reporting within selected listed companies in Nigeria. A stratified random sampling technique will be employed to ensure adequate representation of companies across the financial services, manufacturing, consumer goods, industrial goods, oil and gas, telecommunications, healthcare, agriculture, and other sectors listed on the Nigerian Exchange Group (NGX). Accounting policy changes will be measured using IFRS implementation, changes in accounting methods, disclosure of accounting policy changes, consistency of accounting policies, compliance with accounting standards, financial statement restatements, and management of transition processes, while financial performance will be measured using Return on Assets (ROA), Return on Equity (ROE), profitability, earnings growth, operating performance, return on investment, and overall organizational performance. Primary data collected from respondents will be analyzed using descriptive statistics to summarize respondents' demographic characteristics and perceptions regarding accounting policy changes and financial performance. Structural Equation Modeling (SEM) will be employed to examine the effect of accounting policy changes on financial performance. The measurement model will be evaluated using Cronbach's Alpha, Composite Reliability (CR), Average Variance Extracted (AVE), and Confirmatory Factor Analysis (CFA) to establish the reliability and validity of the research instrument. Additional diagnostic tests, including multicollinearity assessment, common method bias analysis, and model fit indices such as the Comparative Fit Index (CFI), Tucker-Lewis Index (TLI), Root Mean Square Error of Approximation (RMSEA), and Standardized Root Mean Square Residual (SRMR), will be conducted to ensure the adequacy, consistency, reliability, and robustness of the structural model. The study anticipates that accounting policy changes will have a significant effect on the financial performance of listed companies in Nigeria. Appropriate implementation of accounting policy changes is expected to improve the quality, comparability, and transparency of financial statements, thereby enhancing investor confidence, managerial decision-making, and organizational credibility. Companies that effectively manage accounting policy transitions are also anticipated to strengthen regulatory compliance, improve financial reporting accuracy, reduce reporting errors, and enhance operational efficiency. Furthermore, consistent application of accounting policies in line with IFRS is expected to improve access to capital, strengthen corporate governance, facilitate informed investment decisions, and support sustainable financial performance. Conversely, poorly implemented accounting policy changes, inadequate staff training, weak internal controls, inconsistent policy application, and insufficient disclosure may create uncertainty, reduce financial statement reliability, increase compliance costs, and adversely affect organizational performance. Consequently, effective management of accounting policy changes is expected to contribute significantly to improving financial performance, financial reporting quality, and long-term corporate sustainability among listed companies in Nigeria. This study is expected to make significant theoretical and empirical contributions to the literature on financial accounting, corporate reporting, accounting standards, and financial management by providing comprehensive evidence on the relationship between accounting policy changes and the financial performance of listed companies in Nigeria. Unlike previous studies that broadly examined IFRS adoption or financial reporting quality, this research specifically evaluates accounting policy changes as a determinant of financial performance using primary data and Structural Equation Modeling (SEM). The findings will provide valuable insights for the Financial Reporting Council of Nigeria (FRCN), the Securities and Exchange Commission (SEC), the Nigerian Exchange Group (NGX), professional accounting bodies, corporate managers, auditors, investors, policymakers, and academic researchers regarding the strategic importance of effective accounting policy management in enhancing corporate performance. The study will also provide evidence-based recommendations for strengthening IFRS compliance, improving financial reporting practices, enhancing employee training on accounting standards, reinforcing internal control systems, promoting transparent disclosure of accounting policy changes, and fostering sustainable corporate governance in Nigeria.

Keywords: Accounting policy changes, financial performance, listed companies, International Financial Reporting Standards (IFRS), financial reporting, accounting standards, corporate governance, Structural Equation Modeling (SEM), financial management, Nigeria.