INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) ADOPTION AND FOREIGN

INTERNATIONAL FINANCIAL
REPORTING STANDARDS (IFRS)
ADOPTION AND FOREIGN

ABSTRACT
This paper investigated the effect of
International Financial Reporting Standards
(IFRS) adoption on Foreign Direct
Investment (FDI) inflow in four Anglophone
West African countries, namely Ghana,
Gambia, Nigeria, and Sierra Leone.
Specifically, the paper sought to ascertain
whether IFRS adoption has significant effect
on FDI inflow in the sampled countries, using
three institutional qualities (regulatory
quality, accountability, and political stability)
as the mediating factors. Secondly, the
paper sought to ascertain whether
significant changes exist in the amount of
FDI inflow in the sampled countries,
following the adoption of IFRS. The ex-post
facto research design was used. Data were
sourced from the World Bank’s World
Development Indicators (WDI), United
Nations
Conference
on Trade
and
Development
(UNCTAD),
the
World
Governance Indicators, published by the
World Bank, and the IFRS Foundation (2019)

The period covered ten (10) years for each
sampled country (five years each for the pre
and post IFRS adoption periods). Panel
regression analysis (based on fixed effect
model) and the test for equality of means (t -
test) were used for data analysis. The results
of the paper suggested that FDI inflow is not
significantly affected by IFRS adoption in the
sampled countries when taken as a region.
Accountability positively but insignificantly
complements the effect of IFRS on FDI inflow.
The mediating role of political stability is
perverse and insignificant. The paper also
found that Ghana and Sierra Leone have
witnessed significant positive changes in FDI
inflows, in absolute terms, following the
adoption of IFRS. This finding is supported by
the strength of institutional qualities in these
two countries. On the contrary, Nigeria and
Gambia witnessed significant negative

changes in FDI inflow after the adoption of
IFRS. The paper, therefore, recommended
that countries should strive to develop their
institutional capacity, through policies that
will support regulatory quality, in order to
complement IFRS adoption in attracting more
FDI inflow.
Keywords:
International Financial
Reporting
Standards,
Foreign
Direct Investment, Institutional Qualities, and
Anglophone West African Countries.

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