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The effect of IFRS adoption on financial reporting quality: evidence from listed manufacturing firms in Ghana

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  • Emmanuel Mensah

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.

Suggested Citation

  • Emmanuel Mensah, 2021. "The effect of IFRS adoption on financial reporting quality: evidence from listed manufacturing firms in Ghana," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 34(1), pages 2890-2905, January.
    • Handle: RePEc:taf:reroxx:v:34:y:2021:i:1:p:2890-2905
    DOI: 10.1080/1331677X.2020.1860109
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    Cited by:

    1. Chen, Guoli & Qian, Zhe & Bolatbek, Botagoz & Na, Liu, 2024. "A comparative study of the nexus of natural resource investment in national economies: Effects on cultural communication and economic growth," Resources Policy, Elsevier, vol. 94(C).
    2. Michael Amoh Asiedu & Emmanuel Mensah, 2023. "Re-examining the corporate governance – Firm performance nexus: Fresh evidence from a causal mediation analysis," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2223414-222, December.
    3. Emmanuel Mensah & Peter Ackah & Mamdouh Abdulaziz Saleh Al-Faryan, 2024. "Firms growth opportunities and accruals earnings management nexus: does corporate and national governance systems play a role?," SN Business & Economics, Springer, vol. 4(10), pages 1-41, October.

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