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Compliance level with IFRS disclosure requirements across 12 African countries: do enforcement mechanisms matter?

Compliance level with IFRS disclosure requirements across 12 African countries: do enforcement... The purpose of this study is to investigate the effect of enforcement, and more particularly government quality and the stock market development, on compliance with International Financial Reporting Standards (IFRS) disclosure requirements in 12 African countries.Design/methodology/approachThe authors use a self-constructed compliance index from content analysis and apply panel regressions for a sample of 606 firm-year observations during the period 2012 to 2014.FindingsThis analysis illustrates a high level of disparity of information provided by companies, possibly due to the complexity of the selected standards and the depth of information required. The findings reveal that government quality and stock market development have a positive and significant effect on compliance with IFRS disclosure requirements in Africa. This implies that enforcement plays a key role in improving the compliance level across African countries.Practical implicationsThese findings should be of interest to government policymakers, professional bodies, regulators and standard setters who are concerned with compliance and financial reporting transparency at a country level. It should be a signal to call for more effort to strengthen the enforcement of accounting standards and capital market supervision by putting in place some disciplinary actions for non-compliance with IFRS. The authors also believe that the results may help African policymakers and regulators enhance the level of compliance with IFRS disclosure requirements by enforcing accounting standards.Originality/valueThis research contributes to the compliance literature by investigating the effect of enforcement on compliance with IFRS disclosure requirements in the African countries, an understudied context where enforcement is a challenge. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Regulation and Compliance Emerald Publishing

Compliance level with IFRS disclosure requirements across 12 African countries: do enforcement mechanisms matter?

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References (78)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1358-1988
eISSN
1358-1988
DOI
10.1108/jfrc-09-2020-0094
Publisher site
See Article on Publisher Site

Abstract

The purpose of this study is to investigate the effect of enforcement, and more particularly government quality and the stock market development, on compliance with International Financial Reporting Standards (IFRS) disclosure requirements in 12 African countries.Design/methodology/approachThe authors use a self-constructed compliance index from content analysis and apply panel regressions for a sample of 606 firm-year observations during the period 2012 to 2014.FindingsThis analysis illustrates a high level of disparity of information provided by companies, possibly due to the complexity of the selected standards and the depth of information required. The findings reveal that government quality and stock market development have a positive and significant effect on compliance with IFRS disclosure requirements in Africa. This implies that enforcement plays a key role in improving the compliance level across African countries.Practical implicationsThese findings should be of interest to government policymakers, professional bodies, regulators and standard setters who are concerned with compliance and financial reporting transparency at a country level. It should be a signal to call for more effort to strengthen the enforcement of accounting standards and capital market supervision by putting in place some disciplinary actions for non-compliance with IFRS. The authors also believe that the results may help African policymakers and regulators enhance the level of compliance with IFRS disclosure requirements by enforcing accounting standards.Originality/valueThis research contributes to the compliance literature by investigating the effect of enforcement on compliance with IFRS disclosure requirements in the African countries, an understudied context where enforcement is a challenge.

Journal

Journal of Financial Regulation and Compliance – Emerald Publishing

Published: Jan 13, 2022

Keywords: Financial reporting; Disclosure; IFRS; Compliance; Government

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