Empirical Test of Multidimensional Model for Estimating International Financial Reporting Standards (IFRS) Compliance: Perspective of Ghanaian Banks

Abstract

The paper conducted empirical investigation of multidimensional model for estimating IFRS compliance. It has been argued in the literature that IFRS is not a single construct but multidimensional construct and therefore cannot be adequately measured using a single proxy. Owing to this, Queku proposed multidimensional models for estimating IFRS compliance. This paper is seen as a follow up paper to empirical test these models.

The paper uses secondary data from Ghanaian banks between the period of 2008 to 2014. Time varying equality test was employed to test these models. Three main tests were conducted: test of statistical difference between the single constructs, test of statistical difference between single constructs and the multidimensional models and finally test of statistical difference between the multidimensional models. It was found that the individual constructs identified have significant difference between them. It was also revealed that there is significance difference between the single constructs and the multidimensional models. However, no significant difference was found between the multidimensional models. It is recommended that given the differences in the constructs, researchers and accounting experts should measure IFRS using the multidimensional model for consistency in assessment and to avoid mixed results in evaluating compliance. It is again suggested that researchers should use the multidimensional model for IFRS value relevance, economic consequence and contribution studies.