ADOPTION OF IFRS AND FINANCIAL STATEMENT EFFECTS: THE PERCEIVED IMPLICATIONS ON FDI GHANA ECONOMY

Abstract

This study examined the effect of IFRS adoption on the quality
of financial statements of selected firms on the Ghana Stock
Exchange. The study used the extent of management practices
as a metric for financial statement quality. The audited annual
reports of the selected firms from the GSE were analyzed using
a panel regression model over the period 2001-2006 and
20072014. The study finds the adoption of IFRS to be
significantly and negatively affect earnings management
practices and, thus, improves financial statement quality. On
the extent of earnings management practices, the study finds
a decrease in the postadoption era as opposed to the preadoption era, signifying an improvement in accounting
quality. The panel regression results show that adopting IFRS
significantly decreases the extent of earnings management.