Factors Influencing the Adoption of International Financial Reporting Standards by African Countries

The purpose of this paper is to identify the factors which may influence the adoption of the International Financial Reporting Standards (IFRS) by African countries. Using previous literature, the following factors were identified: economic growth, education level, economic openness, culture and the relative capital market size. All countries in Africa were selected. However, in view of the difficulties in obtaining data for all countries, only 32 African countries comprised the data set. A logistic regression analysis was thereafter conducted. The results indicate that as African countries begin to grow at a quicker rate, they are more likely to adopt IFRS. Countries with relatively higher levels of market capitalisation are also more likely to adopt IFRS. The culture variable was the most significant of the explanatory variables, suggesting that African countries with cultural ties to the United Kingdom are significantly more likely to adopt IFRS than those with no such cultural ties.