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<p>The impact of mandatory IFRS adoption on earnings management and its implications for the cost of debt in emerging economies is a critical area of research. Despite the mandatory implementation of IFRS, empirical evidence suggests that African-listed firms often fail to comply due to weak enforcement mechanisms. This study examines the impact of IFRS adoption on earnings management and its subsequent effect on the cost of debt in emerging economies, with a particular focus on Ghana and Kenya. Using an explanatory research design, the study applies random and pooled OLS techniques for inferential analysis, drawing on 495 firm-year observations from listed non-financial firms between 2010&#xa0;and&#xa0;2020. The findings indicate that IFRS adoption significantly reduces earnings management, thereby enhancing accounting quality. Furthermore, the results underscore the crucial role of earnings management in moderating the relationship between earnings quality and the cost of debt. The study recommends that regulators strengthen IFRS enforcement to promote higher-quality financial reporting, fostering greater transparency, investor confidence, and a more robust investment climate in emerging economies. These insights offer valuable guidance for decision-makers, regulators, and policymakers seeking to enhance corporate financial reporting through the adoption of IFRS. Additionally, the study contributes to the literature by illuminating the broader implications of IFRS adoption for financial reporting quality and credit risk assessment in emerging markets.</p>

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The impact of mandatory IFRS adoption on earnings management and its implications for the cost of debt in emerging economies

  • 期刊论文

  • 发表日期：

    2025年7月25日

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  • Musah Mohammed Saeed

摘要

The impact of mandatory IFRS adoption on earnings management and its implications for the cost of debt in emerging economies is a critical area of research. Despite the mandatory implementation of IFRS, empirical evidence suggests that African-listed firms often fail to comply due to weak enforcement mechanisms. This study examines the impact of IFRS adoption on earnings management and its subsequent effect on the cost of debt in emerging economies, with a particular focus on Ghana and Kenya. Using an explanatory research design, the study applies random and pooled OLS techniques for inferential analysis, drawing on 495 firm-year observations from listed non-financial firms between 2010 and 2020. The findings indicate that IFRS adoption significantly reduces earnings management, thereby enhancing accounting quality. Furthermore, the results underscore the crucial role of earnings management in moderating the relationship between earnings quality and the cost of debt. The study recommends that regulators strengthen IFRS enforcement to promote higher-quality financial reporting, fostering greater transparency, investor confidence, and a more robust investment climate in emerging economies. These insights offer valuable guidance for decision-makers, regulators, and policymakers seeking to enhance corporate financial reporting through the adoption of IFRS. Additionally, the study contributes to the literature by illuminating the broader implications of IFRS adoption for financial reporting quality and credit risk assessment in emerging markets.