Effect of International Financial Reporting Standards Compliance on Financial Reporting Quality: Evidence from a Developing Country
DOI:
https://doi.org/10.47604/ijfa.1802Keywords:
African Perspective, IFRS Adoption, Quality Financial InformationAbstract
Purpose: Despite global adoption of International Financial Reporting Standards to improve financial reporting quality, there is still inconclusive and limited empirical evidence of improving financial reporting quality especially from developing countries. Therefore, the study analysed the relationship between International Financial Reporting Standards compliance and Financial Reporting Quality from an African country perspective.
Methodology: Financial Reporting Quality was measured using measurement tool developed by the Nijmegen Center for Economics and International Financial Reporting Standards compliance was measured using dichotomous and partial compliance methods. Study period was 2012 to 2018 involving 20 Zambian listed companies. Study involved panel data analysis and hence, Hausman test was conducted to select the model. Multiple linear regression was used as a data analysis method.
Findings: The results indicated a statistically insignificant relationship between International Financial Reporting Standards compliance and Financial Reporting Quality. Therefore, the implication of the study is that the adoption of International Financial Reporting Standards does not influence financial reporting quality among Zambian listed companies. The low compliance with International Financial Reporting Standards among the listed may have contributed.
Unique Contribution to Theory, Practice and Policy: This is first study in Zambia looking at the influence of IFRS Compliance on Financial Reporting Quality and therefore, contributes to the extant empirical studies analysing whether IFRS compliance influences the financial reporting quality given the mixed results across.
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