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Why Do African Countries Adopt IFRS? An Institutional Perspective

Author

Listed:
  • Pran Krishansing Boolaky

    (Nexia Baker & Arenson, 5th Floor C&R Court, 49 Labourdonnais Street, Port Louis, Mauritius)

  • Vincent Tawiah

    (DCU Business School, Dublin City University, Collins Avenue, Glasnevin, Dublin 9, Ireland)

  • Teerooven Soobaroyen

    (Essex Business School, University of Essex, Colchester Campus, Wivenhoe Park, Colchester CO4 3SQ, UK)

Abstract

We examine the institutional drivers of International Financial Reporting Standards (IFRS) adoption in Africa. The study covers all 54 African countries and relies on data from 2010 to 2015. Our results support the neo-institutional theoretical predictions that coercive, mimetic, and normative isomorphism influence IFRS adoption in Africa, although the circuits of isomorphic pressures differ from previous studies investigating adoption at the worldwide level and in emerging economies. Specifically, we find evidence of the influence by the World Bank and International Monetary Fund on African countries made subject to the Report on Observance of Standards and Codes — Accounting and Auditing program of assessment. We also found that the presence of global audit firms and the years of membership in the International Federation of Accountants are strongly associated with a country’s decision to adopt IFRS. Also, countries with a more structured and active professional accounting organization (PAO) are more likely to adopt IFRS. Our findings provide insights into the significant role played by local PAOs in the promotion of IFRS. Furthermore, we provide empirical evidence that the nature of the isomorphic pressures in Africa is different from those suggested in prior studies, reinforcing the view that IFRS adoption is primarily driven by social and political dimensions, rather than the economic dimension usually professed by IFRS proponents.

Suggested Citation

  • Pran Krishansing Boolaky & Vincent Tawiah & Teerooven Soobaroyen, 2020. "Why Do African Countries Adopt IFRS? An Institutional Perspective," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 55(01), pages 1-40, March.
    • Handle: RePEc:wsi:tijaxx:v:55:y:2020:i:01:n:s1094406020500055
    DOI: 10.1142/S1094406020500055
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    Citations

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    Cited by:

    1. Vincent Tawiah & Ernest Gyapong, 2023. "International financial reporting standards, domestic debt finance and institutional quality: Evidence from developing countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2915-2936, July.
    2. Shruti, R. & Thenmozhi, M., 2023. "Founder ownership and value relevance of IFRS convergence: Role of institutional investors," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    3. Elad, Charles & Shah, Neeta & Agyeman, Charles, 2023. "Accounting classification in the era of International Financial Reporting Standards: The case of Africa," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).
    4. Oberholzer Merwe & Omotoso Matthew Olubayo & Schutte Danie & Buys Pieter, 2022. "The Relative Success of IFRS Adopted African Countries to Attract Foreign Investment," Studia Universitatis Babeș-Bolyai Oeconomica, Sciendo, vol. 67(1), pages 44-62, April.
    5. Kar Shun Wong & Azlan Amran & Ei Yet Chu, 2023. "Institutional antecedents of integrated reporting quality: The moderating role of board independence," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 30(2), pages 621-640, March.

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