WSEAS Transactions on Business and Economics
Print ISSN: 1109-9526, E-ISSN: 2224-2899
Volume 15, 2018
The Effect of IFRS Adoption and Corporate Performance: Evidence of South Africa
Authors: Michael Yeboah, Andras Takacs
Abstract: This study uses different econometric methods in estimating regression models to broaden our understanding of IFRS adoption on corporate performance. We provide evidence on the interactions of analyst following, managerial opportunism and information asymmetry besides macroeconomic factors on corporate performance information. The study leverages a fixed effects panel data set of 49 listed manufacturing and mining firms in South Africa, we show that Breusch-Lagrange Multiplier tests and the test of over-identifying restrictions were used. We used a hand-collected dataset between 2000 and 2015. The regression analysis results show that IFRS adoption had a negative significant impact on ROA, ROE, and MKTBOOK, but revealed a positive effect on earnings per share. In particular, the findings showed that interaction of IFRS and analyst following has a positive impact on returns on an asset but have a negative impact on earnings per share and market-to-book. Also, the interaction of IFRS and information asymmetry, IFRS, and managerial opportunism have a negative impact on the market-to-book and returns on equity. Integrity, government borrowings, and bankruptcy affect earnings per share positively. This study is one of the few to recognize managerial opportunism, analyst following, and information asymmetry as moderation role between IFRS adoption and corporate performance in Sub- Saharan African. The results lend credence to the fact that the interaction of IFRS adoption and information asymmetry impact on performance offer useful insights to policymakers charged with improving the reporting standards in mining and manufacturing companies in South Africa.
Search Articles
Keywords: IFRS adoption, corporate performance proxies, macroeconomic factors, panel data, South Africa
Pages: 475-487
WSEAS Transactions on Business and Economics, ISSN / E-ISSN: 1109-9526 / 2224-2899, Volume 15, 2018, Art. #48