Disclosure Level and Compliance with IFRS: An Investigation of Ghanaian Firms

Abstract

IFRS is a timely response to the globalization of business activities in the area of financial reporting practice. This study empirically examines the extent of compliance of Ghanaian listed firms with IFRS disclosure requirements. It secondly identifies the firm-specific factors stated as company size, profitability, leverage, auditor type, company age, and the type of industry that influence the variation in the level of compliance. The study uses a longitudinal dataset of 2008 to 2017 annual reports of 35 listed firms. The study adopts both the dichotomous approach (DA) and partial compliance approach (PA) of measuring compliance in other to make an informative outcome. The findings reveal an average compliance score of 86.4% (DA) and 85.8% (PA). On records, there is still significant non-compliance with IFRS mandatory disclosure. When the corporate attributes are regressed, the study shows that larger firms and firms audited by the BIG 4 accounting firms have a significant positive association with the level of compliance. Profitability shows a significant negative association also under both compliance measures. On the flip side, there is no statistical significance identified for leverage and company age. To test the sensitivity of the regression analysis, a robustness test is conducted and the outcome rarely differs. The study is essential as investors' decisions lean on this knowledge and also, this study is the first of its kind to use both compliance methods side by side.

Keywords: International Financial Reporting Standards, corporate disclosure, listed firms, Ghana.

DOI: 10.7176/RJFA/12-23-04

Publication date: December 31^st 2021