Assessing the value relevance of financial data of listed banks after adoption of international financial reporting standards in Ghana

Abstract

Since the mandatory adoption of International Financial Reporting Standard (IFRS) in 2007 in Ghana, there have been little empirical studies focusing on value relevance of financial data using return-model. This study focused on value relevance of earnings after IFRS adoption in ECObank Ghana Limited, UT Bank Limited, Societe Generale Bank, Standard Chartered Bank Ghana Limited, GCB Bank, Agricultural Development Bank, National Investment Bank and HFC Bank Limited. The study used only secondary data, obtained from audited annual financial statements over the periods 2000-2006 (pre-adoption period) and 2008-2014 (post-adoption period). The study adopted return- model to estimate value relevance of earnings per. The study estimated nine different Ordinary Least Square (OLS) regressions, three for all banks, three for only public banks and three for only private banks. The study found that earning per share had higher value relevance after IFRS adoption in all the listed banks. However, earnings per share were more value relevant in private banks than in public banks. The researcher recommends that investors should enforce the adoption and compliance of IFRS in Ghana and stockholders should rely on earnings per share when making investment decisions since they are more value relevant under IFRS. All private banks and non-banking financial institutions should be encouraged to adopt IFRS since earnings under IFRS are more value relevant.