Effect of ifrs compliance on the profitability of listed banks in ghana

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This study investigates the effects of International Financial Reporting Standards (IFRS) compliance on the profitability of banks listed on the Ghana Stock Exchange (GSE). This study specifically seeks to achieve certain objectives of which the main aim is to examine whether a listed bank in Ghana’s compliance with IFRS influences its iii profitability. Aside, it seeks to examine the relationship between profitability and the following company attributes: bank’s capital, bank’s size, and bank’s operating expenses. This study employed panel data to analyze annual reports of all listed banks over a 5-year reporting period from 2016 to 2020. A dichotomous scoring approach was employed to measure the compliance levels of the listed banks. Each company's total score for IFRS compliance was derived by dividing the total number of standards complied with by the maximum number of standards expected to be complied with in their annual reports. The analysis findings revealed that IFRS disclosure compliance had an average score of 83.8% implying a relatively high level of compliance with IFRS by banks listed on the Ghana Stock Exchange. Furthermore, the study revealed that IFRS compliance, bank size, bank capital, and bank’s operating expenses have positive significant impacts on the profitability of banks when measured with Return on Asset (roa). IFRS compliance was revealed to have a significant positive impact on the ROE of these banks whereas the bank’s size, bank’s capital, and bank’s operating expenses also showed negative but significant impacts on the Return on Equity (roe) of these banks. This study realized the high IFRS compliance levels of listed banks in Ghana in their annual reports and recommended that other banks and non-financial institutions listed or not be given strict measures to ensure high IFRS compliance in such entities and or different industries as well.
A thesis submitted to the department of accounting and finance, school of business, college of humanities and social sciences Kwame Nkrumah university of science and technology, Kumasi, Ghana, in partial fulfillment of the requirements for the degree of master of science (accounting and finance)