Role of International Financial reporting Standards adoption on the Board Diversity and Accounting Quality relationships among firms listed in the East African Community Securities Exchanges

Abstract

Abstract

The study sought to analyze the impact of adopting IFRS on the association between board diversity and the quality of accounting for companies listed at the EAC securities exchanges. The study analyzed data from 53 listed firms in the EAC from 2013 to 2020. Primary and secondary data were used to analyze the study’s research hypothesis. Data was analyzed using multiple regression analysis as guided by the Baron and Kenny (1986) approach to test the study’s hypothesis.  Board diversity data was obtained from director profiles, IFRS adoption was assessed using an IFRS disclosure index developed from the IASB disclosure checklist while accounting quality was assessed by use of the indicators of discretionary accruals, value relevance and the fundamental qualitative attributes. The findings of the study reveal that adopting IFRS does not affect the relation between diversity of boards and management of earnings and financial information value relevance, an intervening effect of adopting IFRS on the association between board’s diversity and the fundamental qualitative attributes of accounting information was established. The study however only utilized listed firms in EAC thus the findings may not be generalizable to firms which are not listed. The findings contribute to the extant knowledge on IFRS adoption, diversity in boards attributes and quality of financial reports by documenting findings for EAC listed firms. Future scholars should explore analyzing accounting quality using other indicators not considered in the current study as the findings vary depending on the quality indicator adopted in the study.

Keywords: Board diversity, IFRS adoption, accounting quality