Linkages between the Adoption of International Financial Reporting Standards and Economic Growth within CEMAC Countries

7 Pages Posted: 21 Sep 2017

See all articles by Professor Alain Ndedi

Professor Alain Ndedi

YENEPAD; ISTG-AC; Saint Monica University; University of Johannesburg; University of Pretoria

Chimene Djapou Fouthe

World Bank

Florence Nisabwe

Independent

Date Written: September 20, 2017

Abstract

In today’s business climate, financial statements disclosed by firms have huge impacts on the society. Financial statements are heavily used by shareholders, creditors, labor unions and government authorities to assess a firm’s financial position, performance and viability. Past experiences show that the reliable and accurate accounting information enables financial market participants to make more rational decisions. International Financial Reporting Standards (IFRS) play a vital role in the preparation of financial statements. The adoption of IFRS has a huge impact on the financial statement elements; assets, liabilities, equity, revenues and expenses. International Financial Reporting Standards contribute to create a business climate that enables investors to make more rational and accurate investment decision. Epstein (2009) asserts that IFRS adoption results in higher financial reporting quality. International authorities such as World Bank, International Monetary Fund, and International Organization of Securities Commissions (IOSCO) encourage the adoption of IFRS to advance effectiveness of financial markets, which in turn may spark the economic growth of adopting countries (Wyatt and Yospe, 1993). Ball (2008) pointed out that financial reporting is one of the most important economic activities. Further, Li and Shroff (2010) declare that high-quality accounting information enables the management of a firm to make much more effective investment decisions, translating into high growth rate of economy. A major driver for International Financial Reporting Standards (IFRS) adoption by countries is the desire to integrate into the global economy. Some of previous research studies show that the adoption of International Financial Reporting Standards has a positive impact on the economic growth. The adoption of IFRS has positive impacts on international trade and significantly enhances the comparability of financial statements prepared by firms from different countries. Samuels and Piper (1985) stated that the adoption of IFRS has a great potential to facilitate global trade activities.

The objective of this paper is to contribute the existing literature on the association between IFRS implementation and economic growth within countries. To achieve the above, a thorough literature review will be conducted with the objectives of developing effective mechanisms for IFRS implementation. In this regard, the paper argued that CEMAC government authorities and regional business organizations should make persistent efforts to enforce IFRS.

Suggested Citation

Ndedi, Alain Aime and Djapou Fouthe, Chimene Diane and Nisabwe, Florence, Linkages between the Adoption of International Financial Reporting Standards and Economic Growth within CEMAC Countries (September 20, 2017). Available at SSRN: https://ssrn.com/abstract=3039980 or http://dx.doi.org/10.2139/ssrn.3039980

Alain Aime Ndedi (Contact Author)

YENEPAD

PO Box 30069
Suunyside
Pretoria, Pretoria 0135
South Africa
+27 84 992 9499 (Phone)

HOME PAGE: http://yenepad.virtualactivism.net

ISTG-AC ( email )

Douala
Cameroon
Douala, WY Littoral 2012

Saint Monica University ( email )

P.O. BOX 132
Buea, South West
Cameroon
237698727474 (Phone)
23767992-0777 (Fax)

HOME PAGE: http://www.stmonicauniversity.com

University of Johannesburg ( email )

UJ ADMINISTRATION. University of Johannesburg
PO Box 524. Auckland Park 2006.
Johannesburg, Gauteng
South Africa

HOME PAGE: http://www.uj.ac.za

University of Pretoria ( email )

University of Pretoria,
Private Bag X20, Hatfield,
Pretoria, Gauteng
South Africa

HOME PAGE: http://www.up.ac.za

Chimene Diane Djapou Fouthe

World Bank ( email )

Nouvelle Route Bastos B.P. 1128
Yaoundé, DC
Cameroon

Florence Nisabwe

Independent ( email )

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
29
Abstract Views
695
PlumX Metrics