Determinants of IFRS Compliance in Africa: Analysis of Stakeholder Attributes
Tawiah, V. & Boolaky P. (2019). Determinants of IFRS compliance in Africa: analysis of Stakeholder Attributes. International Journal of Accounting & Information Management Vol. 27 (4), pp 573-599.
26 Pages Posted: 11 Nov 2019
Date Written: October 31, 2019
Purpose: This paper examines the drivers of companies’ compliance with IFRS using the stakeholder salience theory.
Research Methods: We have used panel data from 205 companies to examine the IFRS compliance level across 13 African countries. Our study has also established the relationship between stakeholders’ attributes and firms’ compliance with IFRS.
Findings: On IFRS compliance, we found that the average compliance score among the companies over the period was 73.09% with a minimum score of 62.86% and maximum of 85.61%. We found a significant positive association between audit committee competence (ACC) and compliance and found the same for chartered accountants on board (AOB). There is less compliance with the latest standards, such as IFRS 3, 7, and 13. Also, IAS 17, 19, 36, and 37 are problematic across the sample. We also found that compliance has been increasing over the years.
Practical implications: For companies, our studies provide empirical evidence on the importance of having chartered accountants’ corporate boards as well as competent audit committees involved in ensuring high compliance with IFRS. Our findings also provide valuable information for professional accounting organizations on the role of its members (chartered accountants) in the effectiveness of IFRS compliance.
Value/Contribution: This study complements and updates prior studies on IFRS compliance with findings from Africa, a region that has been neglected in the literature.
It provides empirical evidence on the importance of chartered accountants sitting on corporate boards in ensuring high compliance with IFRS.
Keywords: Africa, Compliance, IFRS, Stakeholder salience
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