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Determinants of IFRS Compliance in Africa: Analysis of Stakeholder Attributes


Purpose
This paper aims to examine the drivers of companies’ compliance with International Financial Reporting Standards (IFRS) using the stakeholder salience theory.


Design/methodology/approach
The authors have used panel data from 205 companies to examine the IFRS compliance level across 13 African countries. This study has also established the relationship between stakeholders’ attributes and firms’ compliance with IFRS.


Findings
On IFRS compliance, the authors found that the average compliance score among the companies over the period was 73.09 per cent, with a minimum score of 62.86 per cent and a maximum of 85.61 per cent. The authors found a significant positive association between audit committee competence and compliance, as well as among chartered accountants on board. There is less compliance with the latest standards, such as IFRS 3, 7 and 13. Also, IAS 17, 19, 36 and 37 are problematic across the sample. The authors also found that compliance has been increasing over the years.


Practical implications
For companies, this study provides empirical evidence on the importance of having chartered accountants’ corporate boards, as well as competent audit committees involved in ensuring high compliance with IFRS. The findings also provide valuable information for professional accounting organizations on the role of their members (chartered accountants) in the effectiveness of IFRS compliance.


Originality/value
This study complements and updates prior studies on IFRS compliance with findings from Africa, a region that has been neglected in the literature. It provides empirical evidence on the importance of chartered accountants sitting on corporate boards in ensuring high compliance with IFRS.
