Determinants of and obstacles to the adoption of international financial reporting standards in Africa

Stainbank, Lesley and Tauringana, Venancio (2016) Determinants of and obstacles to the adoption of international financial reporting standards in Africa. In, Uchenna, Efobi, Nnadi, Matthias, Tanna, Sailesh and Iyoha, Francis (eds.) Economics and Political Implications of International Financial Reporting Standards. USA. IGI Global, pp. 66-82. (doi:10.4018/978-1-4666-9876-5.ch004).

Abstract

This chapter investigates the determinants of and obstacles to the adoption of International Financial Reporting Standards (IFRSs) in Africa. Specifically we investigate whether English as an official language, educational levels, existence of a capital market, economic openness and economic growth are associated with the probability of a country adopting IFRSs with a sample of 46 African countries. Binary logistics regression was used to analyze the data. The results suggest that only English as one of the official languages was associated with the likelihood of a country adopting IFRSs. Through an examination of the Reports on the Observance of Standards and Codes of the World Bank, we document that the major obstacles to adopting IFRSs are the lack of enabling legislation for its adoption and a lack of capacity in all aspects of the accounting supply chain. The chapter concludes that more research is needed at a continent level given that most of the determinants we investigated are not associated with the likelihood of a country adopting IFRSs.

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Contributors

Author: Venancio Tauringana

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