IFRS and stock exchange development in sub-Saharan Africa: a logistic model

  • Received August 24, 2020;
    Accepted September 30, 2020;
    Published October 9, 2020
  • Author(s)
    Ochuko B. Emudainohwo
    ORCID
  • DOI
    http://dx.doi.org/10.21511/imfi.17(3).2020.30
  • Article Info
    Volume 17 2020, Issue #3, pp. 397-407
  • TO CITE АНОТАЦІЯ
  • Cited by
    2 articles
  • 745 Views
  • 553 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

This study examines the impact of International Financial Reporting Standards (IFRS) on the stock exchange development (SED) in sub-Saharan Africa (SSA). The essence is to offer suggestions on how the adoption of IFRS in the SSA region can benefit their SED. The study employed logistic regression analysis of data for 40 SSA countries for the period 2010–2018. Data were extracted from the World Bank’s World Development Index (WDI) database, sampled countries’ stock exchange websites, and the IFRS website. The dependent variable (SED) took two values: 1 – if a stock exchange is established in the observed country’s period, otherwise – 0. The model result was well fitted: p < 0.0001, correctly classified an overall SED accuracy up to 84.84% and excellent area predictive power at a receiver operator characteristic of 0.9347. The study observed that IFRS had high degree of co-movement with SED, and changes in IFRS had a strong positive impact on SED. Besides, changes in market size, ICT infrastructure, and public sector management and institution (PSMI) had a positive and significant impact on SED. The odd ratio of SED compared to non-SED is greatest with IFRS (40.67 times), and for the other variables, the ratios are: market size (4.02), ICT infrastructure (1.26), and PSMI (2.73), respectively. On a greater extent, SSA countries should allow the use of IFRS for financial reporting to expedite SED.

view full abstract hide full abstract
    • Figure 1. ROC curve
    • Table 1. Variable descriptions
    • Table 2. SED description and the use of IFRS (2010–2018)
    • Table 3. Variables statistic (2010–2018)
    • Table 4. Correlation matrix
    • Table 5. Stock exchange fit test classification
    • Table 6. Regression results
    • Conceptualization
      Ochuko B. Emudainohwo
    • Data curation
      Ochuko B. Emudainohwo
    • Formal Analysis
      Ochuko B. Emudainohwo
    • Methodology
      Ochuko B. Emudainohwo
    • Resources
      Ochuko B. Emudainohwo
    • Validation
      Ochuko B. Emudainohwo
    • Writing – original draft
      Ochuko B. Emudainohwo
    • Writing – review & editing
      Ochuko B. Emudainohwo
Related Articles

  • Effect of financial leverage on firm growth: empirical evidence from listed firms in Amman stock exchange

    Basem HamouriORCID , Mahmoud Al-RdaydehORCID Researcher ID, Anas Ghazalat doi: http://dx.doi.org/10.21511/imfi.15(2).2018.14
    Investment Management and Financial Innovations Volume 15, 2018         Issue #2         pp. 154-164 Views: 1890 Downloads: 658 TO CITE АНОТАЦІЯ

    Past studies have mostly investigated the significance of financial attributes in trade affairs of developed countries, while dismissing such importance among developing nations. As such, this study looked into the influence of financial leverage upon the growth of Jordanian firms. For that purpose, a sample of 91 firms from Jordan had been analyzed via panel data regression method for the period between 2006 and 2015. As a result, the findings portrayed the irrelevance between financial leverage and growth of assets, but a significantly positive correlation with the growth of sales and employment. On top of that, this study revealed that growth of sales and employment had been significantly and positively correlated with firm size. In short, this study dismissed the speculation the constraint Jordanian firms were in, but on the contrary, displayed the ability to gain external financing to ascertain successful progress.

  • The effect of IFRS adoption on the value relevance of accounting information: evidence from South Korea

    Do Hoon Ki , Wook Bin Leem , Jee Hoon Yuk doi: http://dx.doi.org/10.21511/imfi.16(2).2019.07
    Investment Management and Financial Innovations Volume 16, 2019         Issue #2         pp. 78-88 Views: 1840 Downloads: 298 TO CITE АНОТАЦІЯ

    This study investigates whether the value relevance of accounting information was changed after IFRS adoption in South Korea. Related prior studies have found mixed empirical evidence depending on research methodologies or research periods. Moreover, the effect of IFRS adoption on value relevance can be different between Korean stock markets (KSE and KOSDAQ) because they have different characteristics. Also, the main financial statements reported by Korean firms had changed from individual financial statements to consolidated financial statements after IFRS adoption. Thus, this study analyzes the effect of IFRS adoption on the value relevance of individual and consolidated accounting numbers expanding research periods (5 years before and after IFRS adoption) and comparing changes in explanatory powers of Ohlson (1995) model on each listing market. The empirical results indicate that the value relevance of Korean listed firms generally decreased after IFRS adoption. However, the value relevance of KSE listed firms decreased, while the value relevance of KOSDAQ listed firms increased after IFRS adoption. In addition, it was found that the effects of IFRS adoption on value relevance of individual and consolidated financial information were different depending on listed markets. This implies that different level of demand for information environment may induce differential effects of IFRS adoption on value relevance.

  • Problem aspects of transformation in financial reporting of business entities in Ukraine

    Fedir ZhuravkaORCID Researcher ID doi: hhttps://doi.org/10.21511/gg.01(1).2017.05
    Geopolitics under Globalization Volume 1, 2017         Issue #1         pp. 36-44 Views: 1828 Downloads: 751 TO CITE

    In many countries International Financial Reporting Standards (IFRS) have become part of the domestic law or common practice. Ukraine has also taken the first steps to the use of IFRS taking into account its national peculiarities. However, problems occur in the adaptation of international standards, which need to be solved. The proposed article is devoted to the research of specific problems arising during the implementation of IFRS in Ukraine. The author substantiates the expediency of implementing International Financial Reporting Standards in Ukraine, studies the prospects of using international standards in the national accounting practices and defines the principle of transformation as a priority. It determines the stages of IFRS implementation in Ukraine and the problems that arise on each of these stages. As a result, the study highlights the shortcomings of the national accounting system’s reform and ways of optimizing the process of IFRS implementation in Ukraine.

Download Preview
Close
Investment Management and Financial Innovations
Investment Management and Financial Innovations