Factors Affecting The Adoption Of International Financial Reporting Standards (Ifrs)In Selected Private Commercial Banks In Ethiopia

Abstract

This study aims to examine factors affecting the adoption of International Financial Reporting Standards (IFRS) in Ethiopia. The study focuses on examining the benefits and challenges of IFRS including the factors that could influence its adoption. To answer research questions and test the hypotheses the study adopted the mixed research approach. The questionnaire data were analyzed using descriptive statistics, correlations, and multiple linear regression analysis and data from document reviews were interpreted qualitatively. The results show that high cost of adopting, the complex nature, as well as IFRS’s emphasis on fair value accounting, are listed among the most important challenges of IFRS adoption. The study also finds that with the exception of government policy the other six variables which are professional bodies, capital market, educational level, company size, leadership & commitment, and other factors significantly influence the adoption of IFRS in commercial banks. Finally, the findings suggest that a rigorous IFRS capacity building program should be embarked by the government, all regulatory bodies and training institutions in order to provide the needed manpower for IFRS implementation.