Purpose This study aims to analyze the relationship between corporate governance attributes and the International Financial Reporting Standard (IFRS) compliance among Zambian listed companies. Design/methodology/approach Data was collected through content analysis of annual reports and audited financial statements of 20 Zambian listed companies for the period 2012 to 2018. This is a longitudinal study which involved panel data analysis. A Hausman test was conducted to select the model to use to run the panel regression analysis. Findings The results indicate a positive statistically insignificant relationship between board size, board independence and IFRS compliance. A statistically significant negative relationship between audit committee independence and IFRS compliance. However, there is a positive relationship between board members with accounting and auditing experience, the inclusion of women on the board and IFRS compliance. Research limitations/implications Limitation includes the narrow focus on listed companies only which cannot be generalized to other public interest and private companies in Zambia. Practical implications The study findings imply that corporate governance attributes such as the inclusion of qualified and experienced Chartered Accountants and women on the board will increase IFRS compliance. The appointment criteria of non-executive directors should be strengthened. Originality/value This is the first empirical study to analyze the relationship between IFRS compliance and corporate governance in Zambia. The study also responds to the call by the World Bank (2017) to empirically study IFRS compliance in Zambia and contributes to the scant literature in developing countries on determinants of IFRS compliance.
Purpose: The use of different indirect measurement methods by prior empirical studies has led to contradictory findings about financial reporting quality. Therefore, this study assessed the extent of financial reporting quality using the direct method. Methodology: Data was collected through quantitative content analysis of annual reports and audited financial statements of 20 Zambian listed companies for the period 2012 to 2018 using a direct measurement tool developed by the Nijmegen Center for Economics (NiCE). Descriptive statistics were used to assess the extent of financial reporting quality. Findings: The study showed that the mean and median score for financial reporting quality is 2.62(52.3%) and 2.55(51%) respectively with a minimum of 2.06(41.2%) and maximum of 3.21(64.2%). The level of financial reporting quality was moderately low. Further, relevance and comparability of financial reports were poor, and companies used only or mostly historical cost instead of fair value as basis for measurement as proposed by the IFRS for its FRQ standard. Therefore, the financial reporting quality of listed companies do not meet all the criterion set out in the IFRS conceptual framework.
Despite the significant non-compliance with IFRS, most audit reports provide unqualified opinion which brings into question the audit quality in enforcing IFRS compliance. Therefore, the purpose of the study was to examine the antecedents of compliance with IFRS by focusing on the moderating effect of audit quality on the association of firm characteristics and IFRS compliance. The collection of data was done through quantitative content analysis of annual reports of 20 Zambian listed companies and Zambia Institute of chartered Accountants covering the years 2012 to 2018. Being a longitudinal study requiring panel data analysis, a Hausman test was done to choose the model to employ. The Hausman test showed that the random effect model was suitable. Results indicate that audit quality moderates the association of firm characteristics and IFRS compliance. Also, there was a positive association between firm size and compliance with IFRS. There was a negative association between firm profitability and compliance with IFRS. However, there was a statistically insignificant positive association between foreign investors, institutional investors, audit quality and IFRS compliance. The study suggests that large companies are expected to comply more with IFRSs and profitable firms withhold financial information. Audit quality was not impaired probably due to the size of the audit firms and international affiliation. Meanwhile, the influence of institutional investors and foreign investors on IFRS compliance was insignificant probably because both institutional and foreign investors in Zambian listed companies are transient investors without significant incentives to demand financial disclosures and they may have other means to access financial information. The financial reporting regulators should focus on enhancing audit quality for listed companies in Zambia and even in other African countries. Future research can focus on the relevance of IFRS disclosures to the domestic investors in Africa considering the cultural differences both at firm and national-level.
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.
The study's objective was to analyse the relationship between corporate governance attributes and financial reporting quality from a developing country perspective. Data was collected through quantitative content analysis of annual reports and audited financial statements (2012 to 2018) of Zambian-listed companies. This was a longitudinal study that involved panel data analysis. Therefore, a Hausman test was conducted to select the model to use. Panel regression analysis was used as a data analysis technique. Results show a statistically significant positive relationship between board size and financial reporting quality. A positive but statistically insignificant relationship existed between board accounting expertise, board gender diversity, audit committee independence and financial reporting quality. A negative but insignificant relationship existed between board independence and financial reporting quality. The corporate governance system alone cannot guarantee quality financial information by reporting entities. This could be related to the lack of an effective corporate governance system. Therefore, authorities must consider strengthening the regulatory enforcement mechanisms to ensure that companies achieve high financial reporting quality.
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