Influencing of International Accounting Reporting Standards on Quality of Financial Reports

IASB states that the main objective of financial reporting is to provide information that is useful to investors, creditors and others in making investment, credit and similar resource allocation decisions. This study sought to find out if the adoption of IFRS had affected the financial reporting quality of listed firms in Kenya. Sample selection consisted of all companies listed in the Nairobi Stock Exchange (NSE) between 1994 and 2003 excluding banking and insurance companies. The study shows that the value relevance of reported earnings was incrementally higher for listed companies during the post-IFRS convergence period than in the pre-IFRS convergence period. Keywords: IFRS, Kenya, Nairobi Securities Exchange. In a sample of 102 non-European Union countries, we study variations in the decision to adopt International Financial Reporting Standards (IFRS). There is evidence that more powerful countries are less likely to adopt IFRS, consistent with more powerful countries being less willing to surrender standard-setting authority to an international body. There is also evidence that the likelihood of IFRS adoption at first increases and then decreases in the quality of countries' domestic governance institutions, consistent with IFRS being adopted when governments are capable of timely decision making and when the opportunity and switching cost of domestic standards are relatively low. We do not find evidence that levels of and expected changes in foreign trade and investment flows in a country affect its adoption decision: thus, we cannot confirm that IFRS lowers information costs in more globalized economies. Consistent with the presence of network effects in IFRS adoption, we find that a country is more likely to adopt IFRS if its trade partners or countries within in its geographical region are IFRS adopters