Papers by Japhet Imhanzenobe
Contabilitate şi informatică de gestiune, Mar 30, 2024
Research Question: Has IFRS adoption improved the value-relevance of financial statement figures ... more Research Question: Has IFRS adoption improved the value-relevance of financial statement figures in Nigeria? Motivation: The informativeness of the reported earnings, book values, and cash flows depends on the accounting standards used in preparing the financial statements. IFRS is a global set of accounting standards that tries to improve the relevance of accounting figures by recommending more realistic measurement and recognition criteria and increasing the level of disclosure of relevant information. Idea: The value relevance of accounting figures in predicting stock prices is widely acknowledged. However, this study tests whether IFRS adoption significantly improves this value-relevance by increasing the degree of correlation between accounting figures and stock prices in Nigeria. Data: The data were collected from the Bloomberg market data terminal and Datastream financial database. A sample of 85 listed companies was selected. The sample period was from 2007 to 2016. Tools: The study applied the Ohlson model (using fixed and random-effect models) along with the Driscoll-Kraay standard errors (DKSE) and Panel-corrected standard errors (PCSE) to anticipate autocorrelation, heteroscedasticity, and cross-sectional dependence biases. The Ohlson model was estimated separately for the pre-and post-IFRS adoption periods to detect changes in value relevance. The interactions of the IFRS dummy with earnings, book values, and cash flows were also estimated separately to detect the significance of IFRS interaction with the accounting figures.
Thunderbird International Business Review, 2024
The International Financial Reporting Standards (IFRS) is a set of global accounting standards th... more The International Financial Reporting Standards (IFRS) is a set of global accounting standards that tries to provide truer and fairer accounting figures by recommending more realistic measurement and recognition criteria, increasing the disclosure of relevant information, and increasing the comparability of financial statements across borders. Most of the literature on IFRS adoption addresses its impact on the value relevance of accounting figures but ignores the wider picture in terms of impact on stock market performance. The few studies that address IFRS adoption and stock market performance focus on advanced economies and lack proper theoretical underpinning. This study addresses the impact of IFRS adoption on stock market performance in Sub-Saharan Africa. The study applied the autoregressive distributed lag model to test the research hypotheses. The Johannesburg, Nigerian, and Nairobi stock exchanges were selected as the sample markets because they constitute the major frontier markets for foreign investors wishing to penetrate the Sub-Saharan African market. The sample period was from 1990 to 2020. The results of the study showed that IFRS adoption had a positive and significant impact on market efficiency and size for all the selected countries. IFRS adoption had a positive and significant impact on market liquidity in Kenya only. The study recommends that IFRS adopters should implement stock market policies that encourage the participation of foreign investors following the increase in financial statements comparability brought about by IFRS adoption.
Journal of Accounting and Management Information Systems, 2024
Research Question: Has IFRS adoption improved the value-relevance of financial statement figures ... more Research Question: Has IFRS adoption improved the value-relevance of financial statement figures in Nigeria?
Motivation: The informativeness of the reported earnings, book values, and cash flows depends on the accounting standards used in preparing the financial statements. IFRS is a global set of accounting standards that tries to improve the relevance of accounting figures by recommending more realistic measurement and recognition criteria and increasing the level of disclosure of relevant information.
Idea: The value relevance of accounting figures in predicting stock prices is widely acknowledged. However, this study tests whether IFRS adoption significantly improves this value-relevance by increasing the degree of correlation between accounting figures and stock prices in Nigeria.
Data: The data were collected from the Bloomberg market data terminal and Datastream financial database. A sample of 85 listed companies was selected. The sample period was from 2007 to 2016.
Tools: The study applied the Ohlson model (using fixed and random-effect models) along with the Driscoll-Kraay standard errors (DKSE) and Panel-corrected standard errors (PCSE) to anticipate autocorrelation, heteroscedasticity, and cross-sectional dependence biases. The
Ohlson model was estimated separately for the pre- and post-IFRS adoption periods to detect changes in value relevance. The interactions of the IFRS dummy with earnings, book values, and cash flows were also estimated separately to detect the significance of IFRS interaction
with the accounting figures.
Findings: The results showed an overall increase in value-relevance by comparing adjusted R2s across the pre-and post-IFRS adoption period. Also, the interactions of IFRS with earnings, book value, and cash flows were all significant.
Contribution: The study contributes to the existing literature by including cash flow in the value-relevance test in Nigeria and by applying estimation techniques that control for possible estimation biases. The authors recommend that investors pay more attention to these accounting figures under the IFRS regime when making investment decisions.
Management of Environmental Quality: An International Journal, 2022
PurposeThis study evaluates the impact of carbon emission on life expectancy in Nigeria. The stud... more PurposeThis study evaluates the impact of carbon emission on life expectancy in Nigeria. The study also investigates the mediating role of agricultural output and foreign direct investment as suggested by the environmental Kuznets curve (EKC) and the pollution haven hypothesis (PHH), respectively.Design/methodology/approachThe hypotheses and theories were tested using structural equation modeling (SEM). Primary data were collected using cross-sectional survey design. Questionnaires were distributed and responses were used to measure the latent variables of the study. A confirmatory factor analysis (CFA) was used to evaluate the measurement models, while path analysis was used to estimate the coefficients of the structural equations.FindingsCarbon emission was found to have a negative and significant impact on life expectancy. This impact constituted both direct and indirect effects that were mediated by both foreign direct investment and agricultural output. Carbon emission and agri...
International Journal of Professional Business Review, 2023
Purpose: The purpose of this research is to review and compare the development of the three major... more Purpose: The purpose of this research is to review and compare the development of the three major frontier stock markets in Sub-Saharan Africa over time. The study provides some narrative around the historical development of each market as well as a theoretical backdrop for stock market development studies.
Theoretical framework: The adaptive market hypothesis was used as the theoretical backdrop for the study. The adaptive market suggests that stock markets develop in an evolutionary manner (similar to natural selection). This evolution of stock market development is influenced by changes in investors' behavior and regulatory standards.
Design/methodology/approach: Data was collected from 1993 to 2020 on the IMF market efficiency score, the value of stocks traded, aggregate market capitalization, and the number of listed companies for the sample markets. The study used descriptive statistics and trend analysis to discuss and compare the stock market development indicators across the different selected frontier markets.
Findings: The study discovered an improvement in stock market performance across the sample period. The Johannesburg Stock Exchange was found to be the most developed of the three stock exchanges. The Nigerian Stock Exchange was second while the Nairobi Stock Exchange was third. Some factors that erode the performance of these stock markets were also discussed.
The practical and social implications: The sample stock markets are the major frontier markets, and so are often the first stop for foreign investors that want to penetrate the Sub-Saharan African markets. The performance of these markets often determines the level of foreign direct investment (FDI) and foreign portfolio investment (FPI) that flow into Africa.
Originality/Value: Few studies have investigated the performance of stock markets in Sub-Saharan Africa. Also, the few studies that investigate the performance of these markets rarely proceed to discuss the market-wide factors that erode the performance of these markets compared to those of developed economies. Some factors like the size of the economy, low financial literacy, misplaced government policies, poor investment culture, buy-and-hold-tight attitude, and high transaction costs were identified and discussed.
Journal of Accounting and Taxation
Acquisition and restructuring strategies are some of the growth and retrenchment strategies that ... more Acquisition and restructuring strategies are some of the growth and retrenchment strategies that firms employ with the aim of achieving competitive advantage in form of superior financial sustainability position. In this study, we set out to provide a descriptive framework for acquisition and restructuring strategies as corporate level strategies and to investigate the ability of these strategies to help organizations improve their financial sustainability. Acquisition was recommended as an effective diversification strategy due to its benefit of increasing barriers to entry. Horizontal and vertical integration were particularly recommended as effective market development strategies by way of acquisition of unique resources and competitors' market share. However, few authors also discouraged acquisition strategy on the grounds of increase in external reliance for critical resources. Restructuring strategies were recommended as an effective part of a turnaround strategy as opposed to being implemented in isolation.
Journal of Economics and International Finance
Globalization as a concept surpasses a mere openness to symbiotic economic relationship. Globaliz... more Globalization as a concept surpasses a mere openness to symbiotic economic relationship. Globalization refers to the level of openness and positive attitude towards the products, values and ideologies of other people and cultures. The study reviews existing literature on the impact of globalization on work ethics across the globe and tries to observe possible trends of convergence of work ethics among several countries. Most of the reviewed studies revealed a significant impact of globalization on work ethics. The more recent studies also showed trends of convergence among some countries that are geographically far apart and initially had different cultural orientations to work. Since globalization is a continuous process, the degree of this convergence may vary as time goes on.
Cogent Business and Management, 2022
Share prices reflect available financial information about those firms and a substantial amount o... more Share prices reflect available financial information about those firms and a substantial amount of these information come from financial statement figures. The informativeness of the reported earnings and book values in financial statements depend on accounting standards that govern their preparation, thus accounting standards could influence the informativeness of financial statement figures as well as the degree to which investors consider these figures in making investment decision. This relevance of accounting figures to investors is referred to in existing literature as value relevance. This study investigated the relationship between value relevance and the adoption of International Financial Reporting Standards (IFRS). Most pioneer studies on value relevance and changes in accounting standards discovered a decline in the value relevance of financial statements in the US while most of the reviewed studies that address IFRS specifically discovered an increase in value relevance in the respective markets after adoption of IFRS. A few studies also reported a lack in improvement of value relevance following IFRS adoption but attributed the results to anomalies like government interference, mock compliance, improper enforcement, firm-specific differences and business changes that are outside the scope of financial reporting. The study recommended the adoption of IFRS standards as a possible factor that can improve value relevance.
Interdisciplinary Journal of Economics and Business Law, 2021
Financially sustainable companies tend to live longer, thus providing job security for employees ... more Financially sustainable companies tend to live longer, thus providing job security for employees as well as income for shareholders. Financial sustainability ensures that future generations of managers have sustainable earnings available for financing capital projects when they eventually come on board. The study aims to measure some factors that can predict financial sustainability as well as evaluate and compare the abilities of those factors to predict financial sustainability of manufacturing companies. A panel data set was obtained from the Bloomberg portal and was analyzed using exploratory factor analysis and logistic regression. Profitability and cash flow sufficiency were found to be positive and significant predictors while leverage was found to be significant but a negative predictor of financial sustainability. The results suggest that profitability measures have not lost their relevance despite the growing trend in accrual earnings management. However, profitability should not be considered in isolation. This paper contributes to the existing literature on financial sustainability by providing a broader perspective on the predictors that can effectively differentiate sustainable and unsustainable companies.
African Journal of Business Management, 2021
The quest for a better way of enhancing firm performance has led to the discovery of knowledge as... more The quest for a better way of enhancing firm performance has led to the discovery of knowledge as a unique and firm-specific resource for achieving competitive advantage. Knowledge management has gained the attention of practitioners and scholars in recent times. Knowledge management involves obtaining the right set of information and making them available to the right people, at the right time. When an adequate knowledge management system is in place, employees can create, share and re-use knowledge. Existing literature shows that knowledge management is still evolving and factors like intellectual capital, innovation and knowledge application play a significant mediating role in its effect on firm performance. Also, knowledge management processes ought to be followed by effective knowledge management implementation strategies to avoid knowledge proliferation and structuration. Modern businesses are gradually evolving from document-based knowledge management systems towards people-based knowledge management systems as a result of higher capacity for improvement and alignment of knowledge management strategies. Modern businesses also try to foster the effectiveness of their knowledge management process through gamification. Several challenges and limitations to knowledge management like organizational culture, lack of knowledge sharing incentive, cultural differences, lack of proper information structures and change management issues were also identified.
African Journal of Business Management, 2021
The Management Science theory is one of the theories of management that attributes management eff... more The Management Science theory is one of the theories of management that attributes management effectiveness to the application of scientific methods. It goes a step beyond the famous scientific management theory by applying operations research tools and techniques to solving practical problems. Its origin can be traced to the Second World War in Britain. Its method of expressing business factors in form of variables allows for the accurate prediction of business phenomena and overall optimization of profits. The management science approach uses computer applications and operations research tools to solve business problems around quantitative management, operations research, total quality management and management information systems. Its major limitation is its inability to accurately predict business phenomena that contain behavioral elements. The theory ignores the importance of people, relationships and other non-quantifiable factors. Overall, the management science theory provides a new and proactive way of solving business problems by identifying relationships among different business variables that were previously considered unrelated and so, have provided modern businesses with a better way of doing things.
International Journal of Economics, Management and Social Sciences, 2020
This study aimed to identify the effect of some financial
decisions that revolve around the asset... more This study aimed to identify the effect of some financial
decisions that revolve around the assets of the firm on
sustainable cash flows. For the financial performance of
companies to be sustainable, they ought to generate sustainable
cash flows over time because dividends and other appropriations
are often paid from net cash flows. Sustainable cash flow was
measured using the free cash flow yield. Data on leverage,
revenue from asset utilization, and dividend policy of companies
were extracted and their relationships with the free cash flow
yield were examined. The fully modified OLS (FMOLS) was used to
analyze a panel data set of 17 firms listed on the Nigerian
Stock Exchange from 2008 to 2016. Asset turnover was found to be
positive and significant while debt-to-equity ratio and dividend
payout were both found to be negative and significant indicators
of sustainable cash flows. Shareholders were advised to moderate
their appetite for dividends to make sustainable funds more
available. Managers were also advised to promote investment
policies that generate positive net cash flows and avoid
excessive use of debt to cover deficits in asset financing.
Journal of Accounting and Taxation, 2020
One of the major advancements in information technology (IT) is the use of IT tools to perform ac... more One of the major advancements in information technology (IT) is the use of IT tools to perform accounting functions and processes. In this paper, we provide discussions on how IT has affected the accountancy profession. We argued that the traditional duty of accountants is the preparation of financial statements, and consequently, several tasks are carried out throughout that function. In the pre-IT era, accountants were faced with delays in transaction processing and reporting, continuous errors and misstatements, and difficulty in storing large data on papers. However, following the emergence of sophisticated IT tools, accountants in the IT era are now able to prepare and present financial statements more timely and accurately. The availability of the internet has also increased access to financial reports by external users. This paper further argues that in light of the continuous advancements in IT, future accountants and accounting processes are likely to; be cloud-based, communicate with and through Artificial Intelligence machines; invest in Big Data and cyber-security, and explore the potentials of Virtual Reality and Augmented Reality in meeting users' information needs. Hence, accountants and accountancy firms are advised to embrace new IT skills and tools, and keep up with technological trends.
Cogent Economics and Finance, 2020
The study aims to identify which aspects of financial practices of managers need to be given prio... more The study aims to identify which aspects of financial practices of managers need to be given priority in achieving a turnaround in the financial sustainability of these manufacturing companies across long-term returns, sustainable growth and financial distress. Currently, the Nigerian manufacturing sector experiences a decline in financial sustainability, thus forcing financially unsustainable companies out of business. Financial practices that improve the long-term financial position and performance need to be implemented. These financial practices can be measured across short-term profitability, efficiency, liquidity and solvency. Some studies have considered sustainability from a financial perspective using one or two measures but very few focus on the Nigerian manufacturing sector. This study fills these gaps by investigating the impact of financial practices on financial sustainability across these measures. Panel dataset for 17 companies from 2008 to 2016 was collected and analysed using the correlation matrix and random effect model. All regressors were significant in explaining financial distress. However, only short-term profitability and efficiency ratios were consistently significant across all three models, thus indicating the superiority of financial practices that affect short-term profits and efficiency. The study recommends that companies should implement financial policies that address periodic costs and productivity while maximizing marketing efforts simultaneously.
Journal of Accounting and Taxation, 2019
This study investigates the impact of operational efficiency on the financial sustainability of l... more This study investigates the impact of operational efficiency on the financial sustainability of listed manufacturing companies in Nigeria. The recent economic crisis in Nigeria has caused an alarming decline in financial sustainability indicators of manufacturing companies. Managers are forced to make efficient use of resources to maximize profitability so as to cope with and compete in the harsh economic condition. Several measures of efficiency were analysed in relation to financial sustainability. There is a dearth of studies on effect of operational efficiency on long-term profitability in Nigerian manufacturing sector. Also, stock market performance has been ignored by studies in Nigeria. This study helps to fill these gaps by evaluating the impact of operational efficiency on long-term profitability (return on asset) and stock market performance (Tobin’s Q). The efficiency variables considered include; employee growth, operating expenses, account receivables turnover, inventory turnover and asset turnover. A secondary panel dataset ranging from 2009 to 2016 for 16 listed manufacturing companies was obtained from the Bloomberg portal. The Ordinary Least Square method was used to test the 5 formulated hypotheses. The findings revealed that in relation to ROA, operating expenses and asset turnover had negative and positive significant relationship respectively. Employees’ growth, account receivable turnover and inventory turnover were found to be insignificant. In relation to Tobin’s q, both inventory and asset turnover had a positive significant relationship. Operating expense had a negative significant relationship. Again, employees’ growth and account receivables turnover were found to be insignificant. Based on the findings, the study suggests that the common notion of employee retrenchment and keeping a thin workforce may not necessarily promote financial sustainability. The study recommends that firms should strive to reduce their operating expenses and implement efficient strategies that address asset and inventory turnover.
Conference Presentations by Japhet Imhanzenobe
International Conference on Accounting and Business (ICAB) 2022. University of Johannesburg, Auckland Park Campus, South Africa, 2022
The lack of information contained in the financial reports of listed companies in South Africa ha... more The lack of information contained in the financial reports of listed companies in South Africa has created significant information asymmetry between managers and potential investors. This problem has been traced to the irrelevance of accounting figures in predicting share prices. The informativeness of the reported earnings, book values and cash flows depends on accounting standards that govern the preparation of financial statements. International Financial Reporting Standard (IFRS) is a global accounting standard that tries to improve financial reporting quality by recommending more realistic measurement models and recognition criteria for financial statement items as well as increasing the level of disclosure of relevant financial information. This study investigated the impact of IFRS on financial reporting quality in South Africa in terms of value relevance. Specifically, the study applied the Ohlson price regression using fixed and random effect models along with the Driscoll-Kraay standard errors to anticipate autocorrelation, heteroscedasticity and cross-sectional dependence. A before and after the test was done for 5 years pre and post-IFRS. The interactions of the IFRS dummy with earnings, book value and cash flow per share were also estimated separately to detect the cause of change in value relevance. Although the results revealed an overall increase in value relevance, only the interaction of IFRS with cash flows was positive and significant, thus tracing the increase in value relevance to cash flows. The study recommends that cash flow figures should be given special consideration in making investment decisions as they are easy to understand and less prone to earnings management under IFRS regimes.
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Papers by Japhet Imhanzenobe
Motivation: The informativeness of the reported earnings, book values, and cash flows depends on the accounting standards used in preparing the financial statements. IFRS is a global set of accounting standards that tries to improve the relevance of accounting figures by recommending more realistic measurement and recognition criteria and increasing the level of disclosure of relevant information.
Idea: The value relevance of accounting figures in predicting stock prices is widely acknowledged. However, this study tests whether IFRS adoption significantly improves this value-relevance by increasing the degree of correlation between accounting figures and stock prices in Nigeria.
Data: The data were collected from the Bloomberg market data terminal and Datastream financial database. A sample of 85 listed companies was selected. The sample period was from 2007 to 2016.
Tools: The study applied the Ohlson model (using fixed and random-effect models) along with the Driscoll-Kraay standard errors (DKSE) and Panel-corrected standard errors (PCSE) to anticipate autocorrelation, heteroscedasticity, and cross-sectional dependence biases. The
Ohlson model was estimated separately for the pre- and post-IFRS adoption periods to detect changes in value relevance. The interactions of the IFRS dummy with earnings, book values, and cash flows were also estimated separately to detect the significance of IFRS interaction
with the accounting figures.
Findings: The results showed an overall increase in value-relevance by comparing adjusted R2s across the pre-and post-IFRS adoption period. Also, the interactions of IFRS with earnings, book value, and cash flows were all significant.
Contribution: The study contributes to the existing literature by including cash flow in the value-relevance test in Nigeria and by applying estimation techniques that control for possible estimation biases. The authors recommend that investors pay more attention to these accounting figures under the IFRS regime when making investment decisions.
Theoretical framework: The adaptive market hypothesis was used as the theoretical backdrop for the study. The adaptive market suggests that stock markets develop in an evolutionary manner (similar to natural selection). This evolution of stock market development is influenced by changes in investors' behavior and regulatory standards.
Design/methodology/approach: Data was collected from 1993 to 2020 on the IMF market efficiency score, the value of stocks traded, aggregate market capitalization, and the number of listed companies for the sample markets. The study used descriptive statistics and trend analysis to discuss and compare the stock market development indicators across the different selected frontier markets.
Findings: The study discovered an improvement in stock market performance across the sample period. The Johannesburg Stock Exchange was found to be the most developed of the three stock exchanges. The Nigerian Stock Exchange was second while the Nairobi Stock Exchange was third. Some factors that erode the performance of these stock markets were also discussed.
The practical and social implications: The sample stock markets are the major frontier markets, and so are often the first stop for foreign investors that want to penetrate the Sub-Saharan African markets. The performance of these markets often determines the level of foreign direct investment (FDI) and foreign portfolio investment (FPI) that flow into Africa.
Originality/Value: Few studies have investigated the performance of stock markets in Sub-Saharan Africa. Also, the few studies that investigate the performance of these markets rarely proceed to discuss the market-wide factors that erode the performance of these markets compared to those of developed economies. Some factors like the size of the economy, low financial literacy, misplaced government policies, poor investment culture, buy-and-hold-tight attitude, and high transaction costs were identified and discussed.
decisions that revolve around the assets of the firm on
sustainable cash flows. For the financial performance of
companies to be sustainable, they ought to generate sustainable
cash flows over time because dividends and other appropriations
are often paid from net cash flows. Sustainable cash flow was
measured using the free cash flow yield. Data on leverage,
revenue from asset utilization, and dividend policy of companies
were extracted and their relationships with the free cash flow
yield were examined. The fully modified OLS (FMOLS) was used to
analyze a panel data set of 17 firms listed on the Nigerian
Stock Exchange from 2008 to 2016. Asset turnover was found to be
positive and significant while debt-to-equity ratio and dividend
payout were both found to be negative and significant indicators
of sustainable cash flows. Shareholders were advised to moderate
their appetite for dividends to make sustainable funds more
available. Managers were also advised to promote investment
policies that generate positive net cash flows and avoid
excessive use of debt to cover deficits in asset financing.
Conference Presentations by Japhet Imhanzenobe