Abstract:
The adoption of International Financial Reporting Standards (IFRS) has been presented as a factor that improves the quality of financial reports. However, Ghana has not attained the desired levels of financial reporting quality after the adoption of IFRS in 2007. Lack of proper enforcement of these high-quality standards may result in limited compliance and thus, undermine the effectiveness of these standards in terms of resulting in high-quality financial reports. In addition, corporate governance mechanisms serve as an absorptive capacity in the IFRS adoption-reporting quality relationship. In line with this discourse, this study argues that the relationship between IFRS compliance and reporting quality of listed firms revolves around some corporate governance structures in every economy. Therefore, by using random effect estimation technique, this study found that the right corporate governance mechanisms will enhance the positive effect of IFRS compliance on reporting quality. Also, the study found that the right corporate governance mechanism in itself can enhance reporting quality. This study recommends that to gain an appreciable level of public confidence in the annual reports of firms listed on the Ghana Stock Exchange, audit committee independence and board independence should be strengthened to ensure that management does not only adopt IFRS, but that the standards are actually complied with. Such efforts will yield better results if other corporate governance factors such board size, board gender diversity are checked and properly managed.
