Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

DETERMINANTS OF INTERNATIONAL ACCOUNTING STANDARD (IAS) 41

INFORMATION DISCLOSURES REQUIREMENTS BY LISTED AGRICULTURAL
FIRMS IN NIGERIA

Jacob Ojobo Ame1

Usman Musa Musa2

&
Liman Alhaji Mohammed3

Abstract
The study extents the existing, yet limited literature on accounting for agriculture in Nigeria, to
assessed the determinants of International Accounting Standard (IAS) 41 information disclosures
requirements of listed agricultural companies. To achieve the objectives of the study, a total of
all 5 listed agricultural firms in the Nigerian stock exchange market as at 31 st December, 2020
were selected and analyzed for the study using the census sampling technique. The firm’s annual
reports for the period 2012-2020 were used for the study. In testing the research hypothesis, the
study adopted the use of both descriptive statistics and econometric analysis using the panel
generalized least square (GLS) regression. Findings from the study revealed that biological
assets intensity is negatively and statistically significant related to compliance with IAS 41
disclosures {proxied by dindex}. The study contributes to existing literature by providing a more
robust model (framework) that analysis the effects of biological assets intensity, firm size, firm
age, firm listing status on IAS 41 information disclosures requirements in Nigeria. Based on the
findings, the study recommends that listed agricultural firms should increase their biological
assets as this leads to increase in compliance with standard aimed at enhancing market
comparability and assist the users of the related financial information to understand the
performance of biological assets and firm value.

Keyword: Biological Assets Intensity, IAS 41, Agricultural firms and Disclosures, Dindex.

1.0 Introduction
The extent of compliance with information disclosure requirements of International Financial

Reporting Standards (IFRS) has taken the stage of public discourse overtime and it has continue

1
Jacob ojobo Ame, Ph.D, is an Associate Professor of Accounting & Finance with the Department of Accounting, Nasarawa State University Keffi, Nigeria. His teaching and research interests are in Environmental Accounting,
Corporate Reporting, Auditing, and Forensic Investigation. Mobile:+2348038965411, Email address: [email protected]

2
Usman Musa Musa, is an Assistant Lecturer in the Department of Accounting, Nasarawa State University Keffi, Nigeria. His teaching and research interests are in strategic financial management mechanics underlying modern
financing and investment decision, Auditing, and Taxation. Mobile:+2348036390721, Email address: [email protected]

3
Liman Alhaji Mohammed, is an Assistant Lecturer in the Department of Accounting, Nasarawa State University Keffi, Nigeria. His teaching and research interests are in corporate reporting, Tax audit, and Investigation. Mobile:
+23480840998770, Email address:[email protected]
Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

to attract research attention among the academia and professionals. International Financial

Reporting Standards (IFRS) are standards and interpretations adopted by the International

Accounting Standard Board (IASB, 2012). They consist of International Accounting Standards

(IAS) and International Financial Reporting Standards Interpretations (IFRSI). In July 2011,

Nigeria took the decision to adopt IFRS as its reporting standard, backed by Financial Reporting

Council of Nigeria (FRCN) Act 2012 and the Nigeria Accounting Standard Board (NASB) Act

2003. Agriculture have long been recognized as one of the most common business activities,

which differs significantly from other business activities and an engine that contributes to the

growth of the overall economy of Nigeria, which serve as major source of livelihood. In

Nigeria it has over the years accounted largely as a private indigenous activity in spite of the

diversification of interest by government in the sector and its official effort to infuse foreign

private participation (Izechukwu, 2011).

With modernization of business and finance world over, necessities the need for uniform single

sets of financial reporting framework to be used across the globe aimed at enhance credible and

comparability of accounting information (Tamosiunas, 2012). In response to this need, the

Federal Executive Council of Nigeria in its meeting on 28th July, 2010 approved the 1st January,

2012 as day for adoption of International Financial Reporting Standard with International

Accounting Standard on agriculture as a new standard. In spite of the importance of Agriculture

to global economy, accounting for agriculture related activities had got negligible attention from

researcher until the adoption of International Accounting Standard 41 (Herbohn and Herbohn,

2006). This is because there had been no local standard that specifically guided the matter of

accounting for agriculture.

 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

Agriculture sector has been identified as mainstay of national economic development. It occupies

a strategic position in Nigerian economy as it is one of the largest contributors to Nigerian gross

domestic product (GDP). Until early 2016, there had been no significant attention to the sector

(Bagudo and Shuaibu 2021). Today following the efforts by federal government to diversify the

economy, data from the National Bureau of Statistics (NBS) in the second quarter of 2021 shows

Nigeria’s agricultural growth rate. The agricultural sector grew by 1.30% (Year-on Year) in real

term, with a decrease of -.0.28% points from the corresponding period of 2020, and a decrease of

-0.98% points from the preceding quarter which recorded a growth rate of 2.28%. This needs to

be a great concern for the agricultural companies, government and the society.

Prior to adoption of International accounting standard on agriculture, accounting for agriculture

did not attract the attention of accounting and finance researchers in Nigeria. Accounting for

agricultural activities was based on historical costs method which had limitation of not catering

for the unique characteristics of biological assets; one of the important components of accounting

for agriculture. There is now International Accounting Standard on agriculture (thereto referred

to as IAS 41) which is expected to be used in reporting the financial matters of agricultural firms.

Meanwhile, exiting studies revealed a strong compliance with the standard by all listed

agricultural firms in Nigeria (Ibrahim and Kurfi, 2019).

Most importantly, the standard (IAS41) covers matters related to biological assets, agricultural

produce at the point of harvest and government grants. The basic principle of IAS 41 is that

increases in the values of all biological assets owned by reporting entity are recognized as the

assets grown not solely on harvest or sales (IASB, 2014).

More so, the adoption of IAS 41 lead to a radical change from the historical cost model because

the standard requires that biological assets be measured at fair value less cost to sell on initial
 Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

recognition and at subsequent reporting dates, other than when fair value cannot be measured

reliably on initial recognition (Bagudo and Shaibu 2021). However, where there is no available

market to be used as a basis for estimation and the reporting entity cannot reliably estimate the

fair value, the assets should be measured at cost less depreciation and impairment (Gonçalves

and Lopes, 2014). In addition, agricultural produce shall also be measured at fair value less cost

to sell but at the point of harvest only (IFRS 2011).

Despite the fact that studies have shown that agricultural firms have complied with IAS 41

(Ibrahim and Kurfi, 2019), yet the effort to empirically examine those variables that

influence the compliance with the standard is under studies. Most of the studies to this effect

have focused on other sectors. For example, Siyambola, Adegbite and Nwaobia (2018) studied

determined the effect of mandatory disclosures of accounting information on investment

decisions in consumer goods in Nigeria, Segun (2019) studied small and medium scale

enterprises (SMSEs) while Modugua and Eboigbe (2017) studied the determinants of corporate

disclosure of 60 companies after the adoption of IFRS in Nigeria and considering the variables

studied the sample may not include agriculture, additionally Echobu, Okika and Mailafia (2017)

Agriculture and Natural Resources sector and then Odia (2016) examined the determinants of

IFRS compliance of 50 companies quoted in Nigerian Stock Exchange from 2011 to 2013

As can be seen from above, most of the studies on determinants of compliances in Nigeria have

been conducted with focus on other sectors of our economy with little or no study that

specifically covers agriculture. And given the importance of agriculture to Nigerian economy;

there is the need for empirical studies to be carried out to examine those factors that can

influence compliance with IAS 41 on agriculture; a standard that had hitherto been

nonexistent in our financial reporting framework.

 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

Moreover, in studying the determinants of compliance with IFRS in Nigeria, researchers have

focused on variables that are mostly universally applicable to all firms operating in all sectors of

the economy. For example, while Odia (2016) focused mainly on firm size, leverage, operating

cash flow and liquidity, Siyambola et’al (2018) considered roe, size, leverage and liquidity as

control variables, Modugua and Eboigbe (2017) studied firm size and leverage only and Segun

(2019) mainly looked at auditor type and company age. The results generated from these studies

cannot be specifically applied in agricultural sector. This is because variables that are peculiar to

agricultural firms and covered by the standard like biological assets and government grants are

least studied.

This study therefore extents to contribute to the existing literature on compliance with IAS 41 by

examining the influence of one of the least studied variables that is peculiar to agricultural sector

to which this standard applies. The study incorporates biological asset intensity as determinant of

compliance with IAS 41 information disclosure requirements and adoption timing to examine the

impact of years (age) of IFRS experience on the extent of compliance with information

disclosures. The other variables that are examined in addition to biological assets intensity in the

study are firm age, firm size, firm growth and firm listed status. In a general term, the study

seeks to examine the extent to which biological asset intensity, firm age, firm size, firm growth

and firm listed status determine compliance with IAS 41 information disclosure by listed

agricultural firms in Nigeria. On the basis of the main objective mentioned above, the following

null hypotheses have been formulated:

Ho1: Biological asset intensity has no impact on compliance with IAS 41 information disclosure

by listed agricultural firms in Nigeria

 Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

HO2: Firm size has no impact on compliance with IAS 41 information disclosure by listed

agricultural firms in Nigeria

HO3: Firm age has no impact on compliance IAS 41 information disclosure by listed agricultural

firms in Nigeria

HO4: Firm growth has no impact on compliance with IAS 41 information disclosure by listed

agricultural firms in Nigeria

HO5: Firm listed status has no impact on compliance with IAS 41 information disclosure by listed

agricultural firms in Nigeria.

2.0 Literature Review

Disclosure has been defined as the process by which firm management use to communicate

facts and figures on economy and investment information (financial and non-financial) to

investors and all other stakeholders.

2.1 Conceptual Framework

The diagram below shows the graphical impact between the study variables. Figure 2.1.
 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

Biological
Assets
Intensity

Firm Listed
Firm size
status
Information
Disclosure
(Index)

Firm growth Firm age

Source: Researcher’s 2021.

Information Disclosure

Accounting information is the information on financial or economic activities of an organization

which is identified, measured, and communicated to users to enable them makes an informed

judgment about the business or organization (ASSC, 1975). The resulting statistical reports of

accounting information can be used internally by management or externally by other interested

parties including investors, creditors and tax authorities.

Disclosure of accounting information is mostly a financial accounting issue as it relates to the

provisions of value relevant accounting information to various users of accounting information.

Study such as (Botosan and Plumlee 2002; Bagudo and Shuaibu 2021) shows that there exists a

relationship between accounting information disclosure and economic effect. A justification to

assertion is on the increase of stock liquidity, the reduction of capital costs and the increase of

firm monitoring (Suleiman and Sani 2021). This study pointed out that regulated accounting

information disclosure facilitates sound corporate government mechanism, stork market

 Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

development and enhances international capital mobility. Therefore, study on accounting

disclosure can never be over emphasize as it involves the whole accounting information

system.

Similarly, the disclosure of the financial statement is defined as the delivery of various

economic information by the firm which shows the firm’s business performance and positioning

that consist of information about financial and non-financial condition, also information about

both quantitative and non-quantitative notes (Owusu-Ansah 1998; Carolina, Kusumawati, and

Chamalinda 2020). The disclosure of information from the management is a strategic tool

which can improve a firm’s ability to obtain capital with a low cost (Healy and Palepu 2001). A

firm’s annual financial statement can be used as one of the means to disclose information and

function as a firm’s performance monitoring tool (Wardani and Puruwita 2012).

Biological Assets Intensity

According to International Accounting Standard (IAS 41) biological asset is considered as any

living animal or plant used for sale or for conversion into agricultural produce or into additional

biological asset. Yurniwati and Farida (2018) defined biological assets as assets such as living

beings who experienced the biological transformation, start to grow, produce, and reproduce.

Also, because of these biological processes, companies take step to measure the value of these

assets appropriately following the leverage to generate profits in the company. Thus IAS 41,

biological assets include for example sheep, pigs, beef cattle, poultry, fish, dairy cows, trees, tea

leaves, coffee seeds or plants for harvest.

 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

Therefore, the intensity of biological assets shows the level of firm investment against biological

assets owned by the companies. Meanwhile, (Yurniwati and Farida,2018) as cited in Routes and

Patricia (2014) states that the method of measuring biological asset intensity is by divide the

value of biological assets by total assets. Biological assets are typically seen in the statement of

financial position (Balance Sheet) of the companies in industries. The only distinguished features

of biological assets are that it is living thing and the main difference is that biological assets

change and depreciate naturally and more rapidly than other types of assets or goods.

However, the diversity in accounting treatment of agricultural activity based on special nature of

this activity creates uncertainty or contracting view when applying traditional accounting

methods, because of the biological transformation and difficulty of its recording using traditional

model based on historical cost. Biological assets differ from non-living assets because they

change biological form over their lives through growth, degeneration, production or procreation,

resulting in changes in future economic benefits. On the other hand, not all biological assets are

of the same substance; there are some kinds of biological assets that are similar to long-term

assets like equipment during their period of growth and fertility.

Firm Size

Machfoedz (1994), Yurniwwati and Farida (2018) maintain that the size of the company is a

scale that classifies the company into large and small companies in several ways such as total

assets, the value of the stock market, the average level of sales and sales amount. In other word,

(Ahmed & Courtis 1999; Zarzeski 1996). Define firm size as total assets or number of employees

or amount of income or number of shareholders or in terms of sales volume of an organization.

Prior literature shows that one of the advantages of firm size or large firm is economies of scale

because production or distribution is higher than their smaller rivals. Studies indicate firm size as
 Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

a determinant of compliance with financial reporting standards (Gunclaves 2015, Abdul 2013;

Amiraslani, Iatridis, and Pope, 2013; Glaum, Schmidt, Street, and Vogel, 2012; Oliveira,

Rodrigues, and Craig, 2006).

Firm Age

Firm age has been identified in previous studies as an attribute having impact on the quality of

accounting disclosure practice. Overtime, company age has been often seen as a proxy for risk

(Cerbiono and Perbonetti, 2007). Therefore, the extent of firm disclosure can be related to how

many years it has been in operation (Graham, Harvey and Rajgopal, 2005). The older the firm

the more likely they are to have strong internal control procedures.

Similarly, Tawiah and Boolaky (2019) in the study of the determinants of IFRS compliance in

African an analysis of stakeholder, the study established the relationship between stakeholders

attributes and firms compliance with IFRS. The study incorporated adoption timing to examine

the impact of years of IFRS experience on the level of compliance and found that the longer the

years a country or companies has been using IFRS may likely to affect compliance level; for

instance, the longer the years, the higher the compliance level. Despite this strong relationship,

prior studies in Nigeria have not considered it.

Firm’s Growth

Firm’s growth shows how good a firm is maintaining its financial performance. A firm growth

can be expressed as the improvement in the numbers of sales within a firm (Carolina,

Kusumawati and Chamanlinda 2020). A firm that experienced growth has a potential

opportunity to increase the firm size and increase earnings. The growth level of a firm could

influence management decision to disclosure more information. According to the stakeholder

theory, a firm could develop if the firm can fulfill the stakeholder's interest (Freeman and Philip
 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

2002). For stakeholders to know that their interest has been fulfilled, a firm should provide more

adequate information disclosure. The management will choose to disclose more information if

the firm ever experiences growth to fulfill the stakeholder's interest (Hanifa and Rashid 2005;

Oliveire and Criag 2006).

Meanwhile, Whiting and Woodcock (2011) maintain a different opinion and state that, a firm

which is new in the stock exchange listing will be more motivated to disclosure information to

attract investors. It means the lower a firm’s growth, the higher its disclosure level. Another view

by (Taliyang, Tatif and Mustafa 2011) claims that a firm with a low growth level will choose to

not undergo the disclosure regarding the intellectual capital in the financial statement. There is

near absence of research focused on agricultural firms in Nigeria to specifically test the influence

of a firm’s growth on biological asset disclosure in Nigeria.

Firm Listing Status

Muhammad (2009) assert that the firm listing is concerned with the admission of a company’s

capital or market instrument to the trading floors of the stock exchange. Before its admission, the

company must have complied with the listing requirements as embodied in the stock exchange

green book. Stock exchange is the “primary regulators of accounting standards” and it is seen as

a “managerial choice variables” (Hope, 2003; Gunclaves and Lopes 2015).

Biological Assets Intensity and IAS 41 Disclosures Information

Bagudo and Shuaibu (2021) studied the impact of some firm specific attributes on compliance

with international accounting standard (IAS) 41 of listed agricultural firms in Nigeria. Using a
 Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

sample of 5 agricultural firms and cross sectional data, the study covered the period 2012-2019,

the result showed that both biological assets intensity and firm size had positive and significance

impact on compliance with IAS 41 disclosures, but leverage is negatively and significant to

compliance with disclosures. Also, liquidity and firm age are positive but insignificant to

compliance with disclosures. The study was among the few conducted in Nigeria related to

accounting for biological assets and agricultural produce, the secondary source of data collected

from agricultural firms listed in the floor of Nigeria stock exchange as at 31st December, 2019.

The result cannot be applied at present as the period cover is of essence and there is the need for

fresh study considering other variables such as, Firm listing status, firm growth and auditor type.

More so, the study was conducted before disruptive regime imposed by COVID-19 pandemic

and its economic and financial consequent with several countries imposing restrictions that made

it almost impossible to travel from one place to another.

Additionally, Gonçalves and Lopes (2014) studied the determinants of compliance with

international accounting standard on agriculture of 270 firms in Portugal. Using cross sectional

data, the study focused on the year 2011 only. The study categorized the determinants into firm

level (biological assets intensity, ownership concentration, firm size, auditor type,

internationalization level, listing status, profitability and sector) and country-level (legal status).

The study found the disclosure of biological assets by agricultural firms is influenced by

biological assets intensity, ownership concentration, firm size, sector and legal status. The study

covers firms across the globe and the study may not have taken into consideration the divergent

institutional arrangements that affect all the firms.

 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

However, Cyril, Elizabeth and Chukwuemeka (2019) studied the impact of fair value

accounting on biological assets of listed firms in Nigerian agricultural sector with Okomu Oil

Palm Plc as case study. The study used time series data for the period of 2009-2018. Using

Ordinary Least Squares (OLS) multiple regression, the study found that fair value accounting has

insignificant positive effects on biological assets. The study focused on only one agricultural

firm out of only five that could have been studied.

Firm Size and IAS 41 Information Disclosures

Martanti, Lestari and Zarkasyi (2019) studied the impact of biological assets intensity and firm

size on the financial performance of listed agricultural firms on the Indonesian and Malaysian

Stock Exchange. Using a sample of 35 firms and cross-sectional data for the period of 2018, the

study found that both biological assets intensity and firm size had no impact on financial

performance both in Indonesia and Malaysia. The study was conducted in different countries

and due to some institutional factors; the result cannot be applied in Nigeria.

Yurniwati and Farida (2018) assessed the effect of biological asset intensity, company size,

ownership concentration and type firm on biological assets disclosure of listed agricultural firms

in Indonesian stock exchange. Using a selected 18 companies through purposively sample

techniques and cross sectional data for the period of 2012-2015, the regression result showed

that both biological asset intensity and company size listed in the Indonesian stock exchange had

significant positive effect on the disclosure of biological assets, but a concentration of ownership

does not affect the disclosure of biological asset, while type firm had significant negative effect

on the disclosure of biological assets in an agricultural firms. The study was conducted in

different countries and due to some institutional factors; the result may not be applicable in

Nigeria.
 Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

Modugua and Eboigbe (2017) also studied the determinants of corporate disclosure after the

adoption of IFRS in Nigeria with focus on firm size and leverage. The study covered the period

of three years (2012 – 2014). The study used, as sample, 60 companies listed on the Nigerian

Stock Exchange from the various sectors of the Nigerian economy which does not cover

agriculture. Using ordinary Least Square regression, the study found that leverage and firm size

have a significant positive relationship with total disclosure. However, the study focused on only

two variables.

More so, Echobu, Okika and Mailafia (2017) studied the determinants of financial reporting

qualities among listed agricultural and natural resources firms in Nigeria using a sample of seven

out of nine firms for the period of seven years from 2008 to 2015. Using regression and residuals

from the modified Jones model by Dechow, Sloan and Sweeney (1995) as a measure of financial

reporting quality, the study found that there is a positive significant relationship between

leverage, liquidity, board size and financial reporting quality. The data used is old having been

gathered in 2015 and may not reflect the current reality.

Firm Age and IAS 41 Information Disclosures

Segun (2019) studied determinants of compliance with International Financial Reporting

Standards of Small and Medium Scale Enterprises (SMSEs) in Ondo state. The study covered the

period of year IFRS was adopted for SMSEs which is 2014 to 2018. Using primary source of

data and standard multiple regression, the study revealed that compliance with IFRS disclosures

is significantly influenced by, company age, auditor type, firm indices and industry indices.

However, the study covers only SMSEs whose institutional framework is still not robust enough.
 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

Tawiah and Boolaky (2019) studied the determinants of IFRS compliance in African with

analysis of stakeholder; the study established the relationship between stakeholders attributes

(firm age, financial experts on board, ownership concentration and audit committee) on firms

compliance with IFRS. The result of the study show (73.09%) compliance index indicates that

there is strong compliance among the companies with IFRS. On the determinants the study found

a significant positive relationship between audit committee competence and compliance and

found the same for chartered accountants on Board. On the firm age the study incorporated

adoption timing to examine the impact of years of IFRS experience on the level of

compliance and found that the longer the years a country or companies has been using IFRS

may likely to affect compliance level; for instance, the longer the years, the higher the

compliance level. Despite this strong relationship, prior studies in Nigeria have not considered it

more particularly on agricultural firms in Nigeria.

Alfraih and Alanezi, (2015) investigated firm specific attributes of listed firms in Kuwait Stock

Exchange in relation to corporate disclosure. The study used 181 firms as sample of the study for

the 2010, using self-constructed disclosure as dependent variable which was regressed against

firm age, firm liquidity, firm leverage, firm size, firm profitability, audit quality and firm

industry type. The multivariate regression results showed that older, highly leveraged, larger, and

profitable listed firms in Kuwait are associated with high levels of disclosures. The study period

coverage only one year 2010 is matter of concern and there is the need for fresh study.

Meanwhile, Ibrahim (2014) also examined the effects of firm characteristics on corporate

disclosures of 76 firms in Nigeria cutting across all sectors including agriculture with focus on

segments reporting (IFRS 8). The study covered the year 2011 only. Using ordinary least square

regression model, the result of the study revealed that firm listing age, growth, return on
 Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

investment and ownership diffusion are negatively associated with voluntary segments

disclosure. In addition, firm size and industry type are positively associated with voluntary

segments disclosure. The study is somewhat old and the result may not be applicable to present

situations.

Firm Growth and IAS 41 Information Disclosures

Carolina, Kusumawati, and Chamalinda (2020) studied the factors that influence the biological

asset disclosure by testing the effect of firm’s growth, leverage, profitability, liquidity, biological

assets’ intensity, firm size, type of auditor, and listing status. The study covered three years

period from 2016 - 2018. The study used, as samples, the agriculture firms listed on the

Indonesia Stock Exchange (IDX). Using multiple linear regression models. The result showed

that intensity of biological asset had influences on the biological asset disclosure, while leverage,

profitability, liquidity, firm’s growth, firm size, type of auditor, and listing status do not

influence the biological asset disclosure. The study was conducted considering Indonesian

countries and due some institutional framework the result may not applied in Nigeria, while, the

period covered is a matter of concern and there is the need for fresh study having in mind Nigeria

experience.

Firm Listing Status and IAS 41 Information Disclosures

Meanwhile, Baazaoui and Ali-Zarai (2019) studied the effect of firm characteristics on the

disclosure of IAS/IFRS information of listed firms in the three different countries (Tunisia,

France and Canada). Using a sample of 52 Tunisian firm (40 listed on the first market and 12 on

the alternative market), 244 form French firm (35 CAC40 Index (top 40 French firms) and 209

CAC small (index of small Capitalization French firms)) and 223 Canadian firm (36 TX60 (first
 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

60 Canadian companies) and 187 TX20 Index (Small Capitalization Canadian firms). The study

used regression model by ordinary least square. The dependent variable is the disclosure of the

information, whether mandatory or voluntary or elementary (Accounting standard) and the

independent variables includes size, leverage, liquidity, performance, listing status, audit

quality, audit opinion and the country of domicile of the firm (generally, the nationality of the

firm). For each firm, the study measured a disclosure score. If the item is disclosed, they record

the score as 1 and if it is not disclosed, they record the score as 0. There after sum of the scores

obtained by the firm was used to represents the value of disclosure. After which is used to divide

the sum of the scores of the sum of the applicable items (accounting standards). The regression

results showed that the determinants of the disclosure of IAS/IFRS information vary depending

on the nationality of the firm and also showed the importance of the nationality of the firm in

explaining disclosed information since the proxy used "country" has significant coefficients.

More so, listing status, firm size, performance and leverage showed a positive and significant

effect on the information disclosure, but audit opinion, and country of nationality had positive

but insignificant effect on the disclosure of information. In addition, audit quality and liquidity

both had positive and significant effect on information disclosure. However the study was

conducted in different countries and study period cover was not mention and due to some

institutional and social factors the result cannot be applied in Nigeria.

Theoretical Framework

This study used agency theory as theoretical basis. The theory was developed by Jensen and

Meckling (1976). Agency theory is deemed appropriate for this study because compliance with

reporting regulations released by appropriate regulatory agency is expected from managers who

are seen as agents. This much is expected by shareholders who are seen as principal in the
Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

principal-agent relationship in which power to take decisions is vested in the agents by the

principal. The relationship breeds conflicts as a result of which it cannot be said with certainty

that the principal would do as expected by the agents. As a result of this, measures are put in

place including monitoring like IFRS reporting framework that would reduce agency costs and

by extension reduce the opportunistic tendencies of managers (Jensen & Meckling, 1976). Since

financial reporting standard is one of the monitoring mechanisms put in place to properly

monitor the behavior of agents with a view to reducing agency costs as opined by Jensen and

Meckling, it follows, therefore, that agency theory can be used for study that revolves around

compliance with accounting standards (Bagodu & Shaiabu 2020).

3.0 Methodology

The study utilizes a correlational (quantitative) research design, using the secondary source of

data from financial statements of targeted firms. This is informed by the paradigm on

which the study is based which is positivism in nature. The period covered is (2012 -

2020). The decision for choice of the period was in recognition to the fact that Nigeria

adopted the use of IFRS in 2012 and data relevant to the study can only be obtained

within this period. The data used is panel because the data cut across different companies

at different times. Thus, regression is used for the purposed of analyzing the relationship

between the dependent and independent variables. The population covered all the five (5)

agricultural firms listed on the floor of Nigeria Stock Exchange (NSE) as at 31st December 2020

and making up the sample of the study using census sampling technique. The firms are: Ellah

Lake Plc, FTN cocoa Plc, Livestock Feeeds Plc Okomu Oil Palm Plc and Presco Plc.

3.1 Model specification and variables measurement

 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

For the purpose of this study IASs 41 information disclosure requirements compliance was

proxy using self-constructed disclosure index from IAS 41 checklist. The model to be used is

then be represented below:

DINDEXit = β0+β1BAIit+ β2FSit+ β3FAit+ β4FGrit+ β5FLSit + uit

Where:
β0 = Costant
BAI = Biological Asset Intensity
FS = Firm size
FA = Firm Age (Adoption timing)
FLS = Firm listed status
FGr = Firm growth
β1 – β2= Coefficients of the variables.
µ= Error term, i= individual firms, t= time dimension.
The variables presented in the model above were measured in Table 3.1 as follows:

Table 3.1 Description and Measurements of variables included in the regression model
s/n. Variables Code Measurements Source
1 Dependent Variables
Dindex Dummy of 1 for item Annual Ibrahim and
Disclosure requirements disclosed and 0 for item reports Kurfi 2019;
not disclosed. Thereafter, Gonclave and
the ratio of total items Lope 2015,
disclosed divided by total Maimako and
items to be disclosed as Ayila 2015;
required by the standard Alfariah 2009;
will be taken for each. Using Ofoegbu(2018).
weighted Index.
2 Independent Variables
Biological assets divided Annual Bagudo and
Biological asset BAI by total assets reports Shaibu 2020;
intensity: Routes and
Patricia 2015).
Years of used of IFRS Annual Tawiah and
Firm Age FA experience{Adoption reports Booklooky
timing} 2019;Kingsly
2018)
Natural log of total assets Annual Ioraver and
Firm Size FS reports Tsegba (2017);
Uyer (2016)
Salest minus Salest-1 divided Annual Carolina,et’al
Firm Growth FGr by Sales t – 1. reports (2020).

Natural Log of the numbers Annual Alfariah(2009);

Firm Listed Status FLS of year since listed on NSE reports Kabir(2014);
Uyer (2016).
 Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

Source: Researcher’s compilation 2021.

4.0 Discussion of Results

Under this section the results found by the study were presented and analyzed, from which

conclusions were drawn. We began with presentation of descriptive statistics, then correlation

matrix to multicollonearity assumption, hereteskedasticity test, and finally regression results.

4.1 Descriptive Statistics

A descriptive statistic is an analysis of data that helps to describe, show or summarize the

behaviour of data in a meaningful way, which allows for simpler interpretation of the data.  This

table contains the description of the properties of the variables ranging from the mean of each

variable, minimum, maximum and standard deviation.

Table 4. 1: Summary of Descriptive Statistics

Variable Obs Mean Minimium Maximium Standards deviation

DINDEX 45 0.67 0.30 0.88 0.14

BAI 45 0.35 0 0.79 0.26
FS 45 9.96 9.05 10.9 0.61
FA 45 0.58 0 0.95 0.32
FGr 45 4.59 -1 147.4 22.3
FLS 45 1.46 1.11 1.71 0.16
Source: STATA 13.0 output of descriptive statistics

From the table above, it can be seen that the average disclosure compliance with

international accounting standard on agriculture is 0.67 meaning that on average the

compliance with the standard by listed agricultural firms between the period of 2012 -

2020 stood at 0.67. The minimum level of compliance is 0.30 and the maximum is

0.88 with 0.14 standard deviation indicates that the compliance is not far away

from the mean.

 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

4.2. Correlation Matrix

A correlation matrix is a table showing correlation coefficients between variables. Each cell in

the table shows the correlation  between two variables. A correlation matrix is used to

summarize data, as an input into a more advanced analysis, and as a diagnostic for advanced

analyses. The table below shows the correlation between the dependent variable and each of the

independent variables as well as among the independent variables themselves.

Table 4. 2: Correlation Matrix

DINDEX BAI FS FA FGr FLS

DINDEX 1.0000
BAI -0.4972 1.0000
FS 0.2515 0.2865 1.0000
FA -0.1896 0.1278 -0.2723 1.0000
FGr -0.0920 -0.0947 -0.2555 -0.0314 1.0000
FLS 0.5891 -0.6757 -0.1278 -0.0887 -0.0231 1.0000

Source: STATA 13.0 output of correlation matrix

Table 4.2 shows the correlation between the dependent variable, DINDEX and the independent

variables, BAI, FS, FA, FGr, and FLS on one hand, and among the independent variables

themselves on the other hand. Generally, high correlation is expected between dependent and

independent variables while low correlation is expected among independent variables. According

to Gujarati (2004), a correlation coefficient between two independent variables 0.80 is

considered excessive and thus certain measures are required to correct that anomaly in the data.

Thus, from the table 4.2, it can be seen that all the correlation coefficients among the

independent variables and the dependent variables have both positive and negative values

which implies that there is both positive and negative correlation among the variables and
Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

are below 0.80. This points to the absence of possible multicollinearity though the variance

inflation factor (VIF) and tolerance value (TV) test is still required to confirm the assumption

(Gujarati, 2004).

4.3 Multicollinearity Test

In testing for multicollinearity, variance inflation factors (VIF) and tolerance tests was

conducted. The results are presented below.

Table 4.3: Multicollinearity test

Variable VIF 1/VIF
BAI 2.07 0.483401
FLS 1.88 0.533205
FS 1.31 0.761747
FA 1.15 0.869527
FGr 1.09 0.914978
Mean VIF 1.50

Source: STATA 13.0 output of multicollinearity test

From table 4.3 above, shows that the tolerance value (1/VIF) of the individual variables
are all greather than 10% and less than 1. Therefore, with the highest value of VIFs
stood at 2.07 (less than 10), this confirm the absence of multicollinearity among the
variables (Gujarati, 2004).

Heteroskedasticity

To test for heteroskedasticity, the study used breuch-pagan/cook-weisberg test. The test revealed
a chi2 valued of 2.85 and the prob> chi2 of 0.0913 (insignificant). This indicates the
absence of heteroskedasticity.

However, after running the fixed effect and random effect regressions, Hausman test for

fixed effect was conducted and the probability of the chi2 is significant. The significant

value as reported by the probability of chi2 indicates that the Hausman test is in favour of fixed

effect model. Based on the fixed effect regression, the results of fixed-effect OLS are as

interpreted below.
 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

4.5 Regression Result

Table 4.5: Fixed – Effect Regression
Variables Coefficient. T-Value P>(t)
BAI -.0786905 -0.82 0.041
FS .0087816 0.12 0.903
FA .1670504 3.81 0.001
FGr -.0005674 -1.18 0.247
FLS 2.642021 7.32 0.000
Constant -3.343121 -4.29 0.000
R Squared: 0.7411
f. Statistics: 20.03
Prob: 0.0000

From the table 4.5 above shows that R2 is 0.7411 at 1% level of significance meaning

that all the five independent variables put together explain the dependent variable by

74% while the remaining percentage is accounted for by other variables that have not

been captured in the model.

When the individual effects of the independent variables on the dependent variables are

examined in the table above the study found that the coefficient of biological assets

intensity is (-.0786905) at 1% level of significance meaning that there is a negative and

significant relationship between biological assets intensity and compliance with IAS 41

information disclosure, with this we reject the null hypothesis which state that biological

asset intensity has no impact on IAS 41 information disclosure by listed agricultural firms

in Nigeria. This finding is consistent with study (Bagudu and Shuaibu 2020; Yurniwati et al

2018; Gunclave and Lopes 2014). But while prior studies (Bagudu and Shuaibu 2020; Yurniwati

et al 2018; Gunclave and Lopes 2014) show a positive coefficient, the present study coefficient is

negative indicating a decreases in the number of investment in Biological assets by the firms

which could be due to the COVID 19 pandemic that cut across the world with several countries
Ame, J.O., Usman, M. M. and Liman, A.M. (2023). Determinants of International Accounting Standard (IAS) 41 Information Disclosures
Requirements by Listed Agricultural Firms in Nigeria

imposing restrictions to businesses and made impossible to travel from one place to the other and

hence, economic and financial consequence to businesses and business owners.

More so, the coefficient of firm size which is (0.0087816) at 5% level of significance revealed

that there is positive but insignificant relationship between firm size and compliance with IAS

41 disclosure information by listed agricultural firms in Nigeria, the null hypothesis is therefore

accepted that firm size has no impact on IAS 41 information disclosure by listed agricultural

firms in Nigeria. This finding is consistent with the study of (Martanti et al 2019) but

contradicted the study such as (Bagudu and Shuaibu 2020; Yurniwati et al 2018; Gunclave and

Lopes 2014).

Meanwhile, the results of the study shows that firm age with ( 0.1670504 ) coefficient and Firm

listed status 2.642021 coefficient at 5% level of significance has positive and significant

relationship with IAS 41 disclosure compliance by listed agricultural firms in Nigeria. Thus, the

study fail to accept the null hypothesis which state that firm age and firm listing status has no

impact on compliance with the standard. This shows that increase in the companies used of

IFRSs experience (firm age) and the numbers of years since listed on floor of Nigeria stock

market lead to increases in the level of compliance with the standard by listed agricultural

firms in Nigeria. This finding corroborated the study of (Alfraih and Alanezi 2015; Ibrahim

2014; Tawiah and Boolaky 2019; Baazaoui and Ali-Zarai 2019), but inconsistent with study of

Carolina et’al (2020).

However, for the result of firm growth the study shows a negative -.0005674 coefficient and

statistical insignificant. We accept the null hypothesis in that direction. This means that

decreased in firm growth will result to decrease in the compliance with IAS 41 information
 Proceedings of the 3rd International Conference, Faculty of Management Sciences, Bayero University kano

disclosure by listed agricultural firms in Nigeria. This finding is consistent with study of

Carolina et al (2020).

5.0 Conclusion and Recommendations

The study is concerned with how firm attributes of listed agricultural firms in Nigeria influence

compliance with IAS 41 information disclosure. In achieving this, the study utilized available

data from the annual reports of the firms. The data collected was analyzed using GLS. The study

used self-constructed compliance index as dependent variable and took biological assets

intensity, firm size, firm age, firm growth and firm listed status as independent variables. The

study concluded that biological assets intensity and compliance are negatively but significantly

related to compliance, firm size and compliance is index positively but insignificantly related,

while, compliance and firm age positively and significantly related, compliance and firm listed

status positively and significantly related and finally firm growth is negatively and

insignificantly related with disclosure compliance.

Based on the above findings, the study recommends that listed agricultural firms should increase

their biological assets as this leads to increase in compliance with standard aimed at enhancing

the value of the firms. The firms should also increase their size with focus more on total assets

equity as decreases assets leads to decrease in compliance with the standard. Furthermore, as

much as possible, firms should increase their sales turnover and participate more actively in the

capital market as this leads to higher level of compliance with IAS 41.

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