Background of the Study
Investment decisions by foreign investors are influenced by the quality of financial information provided by potential investees. IFRS adoption aims to enhance the credibility, comparability, and transparency of financial statements, which are essential factors for attracting foreign investment. In Nigeria, IFRS is expected to play a critical role in shaping foreign investors’ perceptions and decision-making processes.
Statement of the Problem
Despite IFRS adoption, foreign investment inflows into Nigeria remain relatively low. Factors such as inconsistent compliance, economic instability, and perceived risks may diminish the positive effects of IFRS on investment decisions. This study explores the impact of IFRS on foreign investors’ decision-making 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 analyze how IFRS adoption influences the financial information used by foreign investors.
To identify challenges faced by Nigerian firms in meeting foreign investors’ IFRS-related expectations.
To evaluate foreign investors’ perceptions of Nigerian firms’ IFRS compliance.
Research Questions
How does IFRS adoption influence foreign investors’ decision-making processes?
What challenges do Nigerian firms face in aligning with foreign investors’ IFRS-related expectations?
What are foreign investors’ perceptions of Nigerian firms’ IFRS compliance?
Research Hypotheses
IFRS adoption positively influences foreign investors’ decision-making.
Nigerian firms face significant challenges in meeting IFRS-related expectations of foreign investors.
Foreign investors perceive Nigerian firms’ IFRS compliance as a critical factor in investment decisions.
Significance of the Study
This study provides valuable insights into how IFRS adoption affects foreign investment decisions, contributing to policy formulation and corporate strategy.
Scope and Limitation of the Study
The study focuses on foreign investment decisions involving Nigerian firms between 2012 and 2023. Limitations include variations in investor expectations and external economic factors.
Definition of Terms
Foreign Investors: Individuals or entities investing in assets or businesses outside their home country.
Investment Decision-Making: The process of evaluating potential investments.
IFRS Compliance: Adherence to international financial reporting standards.
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