EFFECT OF INTERNATIONAL ACCOUNTING STANADARDS TWO (IAS 2) – INVENTORY ON FIRM PERFORMANCE OF LISTED CONSUMER GOODS MANUFACTURING COMPANIES IN NIGERIA

Abstract

Despite the adoption of International Accounting Standards (IAS), many listed consumer goods manufacturing companies in Nigeria continue to face challenges in financial performance due to ineffective inventory management. Specifically, the impact of IAS 2, which governs inventory measurement, recognition, and disclosure, on firm performance remains underexplored. This study examined the effect of IAS 2 inventory practices on the performance of listed consumer goods manufacturing companies in Nigeria. The study adopted a positivist research philosophy within a quantitative framework using an ex post facto research design. The population comprised 21 listed consumer goods companies in Nigeria. The study used a purposive sampling technique to select 18 listed consumer goods companies in Nigeria. Secondary data spanning 2012 to 2022 were obtained from audited annual reports and financial statements. Descriptive statistics, correlation analysis, and multiple regression analysis were conducted using STATA version 15. Findings revealed that IAS 2 Inventory Measurement and Inventory Recognition have a statistically significant negative effect on firm performance (p < 0.05), while IAS 2 Inventory Disclosure exerts a positive and significant effect. The study concludes that adherence to IAS 2 significantly influences firm performance of listed consumer goods companies in Nigeria. The study recommends firms to invest in advanced inventory systems, conduct regular compliance audits, and adopt transparent inventory disclosure policies to enhance the performance of listed consumer goods companies in Nigeria.