Background of the Study
Investment decision-making is influenced by a variety of factors, including the quality and transparency of financial information provided by firms. IFRS adoption in Nigeria has been designed to improve the reliability and comparability of financial statements, thereby aiding investors in making more informed investment decisions. For foreign investors, the adoption of IFRS means they can better assess the financial health and potential risks associated with Nigerian firms. The study aims to explore the effect of IFRS adoption on investment decision-making among foreign investors, focusing on how these standards influence their perceptions of Nigerian firms as investment opportunities.
Statement of the Problem
The adoption of IFRS in Nigeria was intended to enhance the transparency of financial reporting and increase the attractiveness of Nigerian firms to foreign investors. However, it is unclear whether IFRS compliance has led to a significant shift in foreign investors' decision-making processes. While IFRS adoption is expected to improve transparency, the actual effect on foreign investment decisions in Nigeria has not been empirically established. This study seeks to investigate how IFRS adoption influences investment decisions made by foreign investors in Nigeria.
Aim and Objectives of the Study
Aim:
To assess the effect of IFRS adoption on investment decision-making among foreign investors in Nigeria.
Objectives:
To evaluate how IFRS adoption has affected the investment decisions of foreign investors in Nigeria.
To investigate the factors that foreign investors consider when making investment decisions in Nigerian firms under IFRS.
To assess whether IFRS adoption has led to increased foreign investment in Nigerian companies.
Research Questions
How has IFRS adoption influenced investment decision-making among foreign investors in Nigeria?
What factors do foreign investors consider when investing in Nigerian firms under IFRS?
Has IFRS adoption led to an increase in foreign investment in Nigerian firms?
Research Hypotheses
IFRS adoption positively influences investment decision-making among foreign investors in Nigeria.
Foreign investors consider IFRS compliance as a key factor in making investment decisions in Nigerian firms.
IFRS adoption has led to an increase in foreign investment in Nigerian firms.
Significance of the Study
The findings of this study will be valuable for policymakers, regulators, and Nigerian firms seeking to attract foreign investments. By understanding how IFRS adoption influences foreign investment decisions, Nigerian firms can better position themselves to appeal to international investors.
Scope and Limitation of the Study
The study will focus on foreign investors who have invested in Nigerian firms after the adoption of IFRS. Limitations include the difficulty in controlling for external factors that may also influence investment decisions, such as political and economic conditions.
Definition of Terms
Investment Decision-Making: The process by which investors decide where to allocate capital based on various factors, including financial performance and transparency.
IFRS Adoption: The process by which Nigerian companies transition to the International Financial Reporting Standards.
Foreign Investors: Individuals or entities from outside Nigeria who invest in Nigerian companies.
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