IFRS And Economic Growth

1986 Words 8 Pages
reduces the ability of the host economy to take advantage of the potential spillover effects of FDI. This suggests an inevitable roles institutions or intermediaries play to lure foreign capital flows and for that matter economic growth as Shaw (1973) recognized the importance of institutions in enhancing capital accumulation and economic growth. Taking cues from Alfaro, et al (2004) and Shaw’s (1973) emphasis on the role of institutions in the growth literature, the general assertion remains that, in the current integration of both national and world economy, an absence of a unified and well transparent system of financial reporting will distort investment across national boundaries (Beke, 2010; Epstein, 2009; Meeks and Swann, 2009). Comparatively, …show more content…
For instance, to support their assertion, Buthe & Mattli (2008) further stated that differences in financial reporting as a result of disparities in local standards lead to differences in the kind of information that would be available to the potential investors which in effect hinders an efficient allotment of investment capital from outside the country. In confirmation, Daske and Gebhardt (2006) revealed that the economic impacts of IFRS in the capital markets were highly (positively) pronounced for firms using IFRS, both in the year before using and after the mandatory period of IFRS …show more content…
To assess the concurrent impact of IFRS and FDI on economic growth from both EU and Africa point of view, and to test the validity of the deployed model, the study used 22 member states of EU and 26 African countries (see appendix 2 for sampled countries used from the two regional perspectives). In addition to their adoption status, the selection of these countries was basically due to the availability of their annual macroeconomic data between the periods spanning from 2002 to 2012 and should not be misconstrued to be the only countries in the said regions. Not ignoring the disparities in the dates each country joined the union from EU perspective, the study did not restrict their(EU’s member states) respective dates of joining the union with an assumption that those countries that joined the union within the period for the study were designated to join and for that matter were observing the requirements in IFRS and accordingly their respective FDI inflows within said periods were somehow influenced by the pronouncement of IFRS adoption indirectly.This is clearly in consistent with Comprix et al. (2003) as they noted in their study that stock markets

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