Original scientific paper
https://doi.org/10.1080/1331677X.2020.1860109
The effect of IFRS adoption on financial reporting quality: evidence from listed manufacturing firms in Ghana
Emmanuel Mensah
orcid.org/0000-0002-3080-3598
Abstract
This paper sought to examine the pre- and post-IFRS adoption
effects on the financial reporting quality (FRQ) of manufacturing
firms listed on the Ghana Stock Exchange (GSE) via means of correlation analysis, as well as regression analysis using a standard
Fixed Effect (FE) model and the Ordinary Least Squares (OLS)
technique. Data was sourced from the audited annual reports of
eleven manufacturing firms observed over the period 2001 to
2006 for the pre-adoption era, and 2007 to 2014 for the post
adoption era, making 148 firm-year observations. Using earnings
management, measured by modified Jones’ discretionary accruals,
as a proxy for FRQ, the regression results showed a significant
negative effect of IFRS adoption on earnings management, thus
indicating an improvement in the FRQ. On the extent of earnings
management practices both pre- and post-IFRS adoption, the
study finds a decrease in the post-adoption era as against the
pre-adoption era, also signifying an improvement in accounting
quality after the adoption of IFRS. The findings of this study indicate that, IFRS adoption enhances the quality of firms’ financial
reports within the Ghanaian capital market, which is envisaged to
boost investor confidence and attract more capital.
Keywords
IFRS adoption; financial reporting quality; earnings management; manufacturing firms; stock market; Ghana
Hrčak ID:
301465
URI
Publication date:
31.12.2021.
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