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IFRS Adoption and the Environment: Is Africa Closing her Eyes to Something?

Beyond the UN Global Compact: Institutions and Regulations

ISBN: 978-1-78560-558-1, eISBN: 978-1-78560-557-4

Publication date: 13 April 2015

Abstract

Purpose

This study aims at establishing a linkage between IFRS adoption and environmental pollution in Africa. More so, the role of institution was emphasized as a possible ameliorator of environmental pollution in the face of IFRS adoption.

Methodology/approach

The empirical model builds on the traditional EKC hypothesis, by including IFRS adoption variable and an interaction term (which captures the multiplicative between IFRS adoption and institutions). Data was gathered for 47 African countries for the period 2001–2013. The SGMM technique was used in the estimation process.

Findings

The robust estimation reveals that a positive and significant linkage exist between IFRS adoption and environmental pollution. The interactive variable also shows that the effect of IFRS on the environment will reduce when institutions quality (in the form of bureaucratic corruption) is addressed.

Originality

The linkage between IFRS and the environment has not received empirical attention. This is partly due to the fact that accounting phenomenon is rarely linked to macroeconomic outcomes. However, there is a rising interest in the role of accounting institutions on economic outcomes and this study contributes sufficiently to this budding body of knowledge.

Keywords

Acknowledgements

Acknowledgments

This chapter is part of a broader research on the economic consequences of IFRS adoption in Africa, which is my PhD focus. Therefore, the funding from Covenant University’s School of Postgraduate Studies is hereby acknowledged. The research guidance of Iyoha, F., and Dick, M., of the Department of Accounting, Covenant University, is also acknowledged.

Citation

Efobi, U.R. (2015), "IFRS Adoption and the Environment: Is Africa Closing her Eyes to Something?", Beyond the UN Global Compact: Institutions and Regulations (Advances in Sustainability and Environmental Justice, Vol. 17), Emerald Group Publishing Limited, Leeds, pp. 169-195. https://doi.org/10.1108/S2051-503020150000017016

Publisher

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Emerald Group Publishing Limited

Copyright © 2015 Emerald Group Publishing Limited