Audit committee effectiveness, isomorphic forces, managerial attitude and adoption of international financial reporting standards

Abstract

Purpose The purpose of this paper is to report the results of a study carried out to establish the contribution of audit committee (AC) effectiveness, isomorphic forces and managerial attitude to the adoption of international financial reporting standards (IFRS). Design/methodology/approach This study is cross-sectional and correlational. Data were collected through a questionnaire survey of 67 MFIs that are members of the Association of Microfinance Institutions of Uganda (AMFIU). Findings Both AC effectiveness, isomorphic forces and managerial attitude significantly contribute to the adoption of IFRS. However, the explanatory power of managerial attitude is subsumed in isomorphic forces and AC effectiveness. Results further indicate that AC effectiveness partially mediates the relationship between isomorphic forces and adoption of IFRS. In terms of control variables, ownership and capital structure are not significant predictors of adoption of IFRS. Originality/value To the authors’ knowledge, this is the first study to investigate the contribution of AC effectiveness, isomorphic forces and managerial attitude to the adoption of IFRS in MFIs using evidence from a developing country on the African scene like Uganda. Further, earlier literature has not tested the mediating effect of AC effectiveness in the relationship between isomorphic forces and the adoption of IFRS which has been reported in this paper.

Ums 24 İli̇şki̇li̇ Taraf Açiklamalarina Uyum Ve Deneti̇m Komi̇tesi̇ Veri̇mli̇li̇ği̇: Bist'te Li̇stelenmi̇ş Şi̇rketler Üzeri̇ne Ampi̇ri̇k Bi̇r Anali̇z

“…Regarding the regression analysis results, it is determined that AC meetings, AC reports, prior experience, financial expertise, firm liquidity, profitability and leverage do not have a significant relationship with the compliance level. These results offer supportive evidence for prior research conducted on AC characteristics (Talpur et al, 2018;Agyei-Mensah, 2019a;Mnif and Znaze, 2020;Talpur et al, 2018;Bananuka et al, 2019). Only AC gender distribution plays a driving role in increasing compliance within the sample.…”

“…On the other hand, AC size, meeting frequency, and separation of duties are not significantly correlated with the disclosure compliance level. Bananuka et al (2019) aim to analyze IFRS application concerning AC effectiveness in a developing country setting, such as; Uganda. The authors employ a 6-point Likert scale survey conducted on members located within the Association of Microfinance Institutions of Uganda.…”

Intellectual capital: mediator of board of directors’ effectiveness and adoption of International Financial Reporting Standards

“…In another study, Bananuka et al (2019a) found that intellectual capital and board of directors’ effectiveness have significant associations with adoption of IFRS among MFIs in Uganda. Relatedly, Bananuka et al (2019b) found that audit committee effectiveness, isomorphic forces and managerial attitude significantly contribute to IFRS adoption in Uganda’s MFIs. Further, Nalukenge et al (2018) conducted a study on IFRS compliance and found that corporate governance, ethical culture and internal controls over financial reporting each make significant contribution to IFRS compliance among MFIs in Uganda.…”

Applicability of IFRS in Vietnam stock exchange listed companies: Perspective from Theory of Planned Behavior

“…In his research on manager attitudes in India and Australia, Bhattacharyya (2014) found that manager attitudes positively affect the decisions in reporting sustainable development. Manager attitudes also play an important role in providing better conditions for applying IFRS in organizations (Bananuka, Kadaali, Mukyala, Muramuzi, & Namusobya, 2019). As a consequence, the hypothesis is:…”