Abstract
This study examines the impact of International Financial Reporting Standards (IFRS) on the stock exchange development (SED) in sub-Saharan Africa (SSA). The essence is to offer suggestions on how the adoption of IFRS in the SSA region can benefit their SED. The study employed logistic regression analysis of data for 40 SSA countries for the period 2010–2018. Data were extracted from the World Bank’s World Development Index (WDI) database, sampled countries’ stock exchange websites, and the IFRS website. The dependent variable (SED) took two values: 1 – if a stock exchange is established in the observed country’s period, otherwise – 0. The model result was well fitted: p < 0.0001, correctly classified an overall SED accuracy up to 84.84% and excellent area predictive power at a receiver operator characteristic of 0.9347. The study observed that IFRS had high degree of co-movement with SED, and changes in IFRS had a strong positive impact on SED. Besides, changes in market size, ICT infrastructure, and public sector management and institution (PSMI) had a positive and significant impact on SED. The odd ratio of SED compared to non-SED is greatest with IFRS (40.67 times), and for the other variables, the ratios are: market size (4.02), ICT infrastructure (1.26), and PSMI (2.73), respectively. On a greater extent, SSA countries should allow the use of IFRS for financial reporting to expedite SED.
Highlights
The stock exchange market provides great opportunities for mobilizing funds, better efficiency and resource allocation (Azeez & Obalade, 2019)
This study examines the impact of International Financial Reporting Standards (IFRS) on the stock exchange development (SED) in sub-Saharan Africa (SSA)
The result suggests that IFRS, market size, ICT infrastructure (ICTI), public sector management and institution (PSMI), and production capacity are more likely to profit from SED
Summary
The stock exchange market provides great opportunities for mobilizing funds, better efficiency and resource allocation (Azeez & Obalade, 2019). Stock exchange provides avenue for investors’ confidence through a strong regulatory framework, transparent disclosure and accountability by listed firms In so doing, it improves the amount of firm’s specific information capitalized into stock pricing through enhanced financial reporting standards. Of IFRS, but have not started developing stock market, are increasingly doing so This is because IFRS is becoming a global standard for preparing financial statements by a public company. This means that the adoption of IFRS is essential for the development of the stock exchange IFRS is either adopted, permitted and/or required by several countries for the presentation of their financial reports, where their firms are listed on their domestic stock exchange markets. The determinants of SED are important to stock exchange stakeholders as well as policy makers seeking to improve their economy
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