Abstract:
The International Financial Reporting Standards are recognized as standards with the potential to improve the quality of accounting information considering the fact that they are principled based standards and may, therefore, better reflect the companies’ financial situation. Accountants and financial economists have for long identified that corporate governance affects earnings management. This study seeks to examine the impact of IFRS and corporate governance on earnings management. Using a quantitative approach, a purposive sampling technique was used to select 22 companies listed on the Ghana Stock Exchange (GSE). Secondary data was collected from the annual reports of listed companies from 2005 to 2018. Data analysis was done using a Paired T-test and regression analysis considering both fixed and random effect. The study result revealed that prior to the adoption of IFRS, earnings management was on the rise. However, the introduction of IFRS reduced the earnings management of listed companies. Findings of the study also showed that board size, board composition and firm size strongly influence earnings management. The study therefore recommends that regulatory bodies should ensure strict adherence to the corporate governance standards set out in the country as well as IFRS. Also, the study recommends a stronger enforcement mechanism for the implementation of IFRS must be instituted by the regulatory bodies to ensure its positive impact on the quality of accounting information.
