Evaluating The Role of Global Accounting Standards in Enhancing Financial Transparency

Abstract

This paper investigates the effect of global accounting standards, mainly IFRS, on financial  transparency in developed and emerging markets. Using a quantitative research design, including publicly listed firms' data over five years (disclosure quality, comparability indices, and institutional variables). The descriptive analysis showed that transparency is more enhanced
in developed markets (mean = 82.5, SD = 5.4, Median = 83) compared to emerging markets (mean = 67.3, SD = 8.1, Median = 68). As can be observed, regression analysis evidenced that IFRS adoption significantly enhances financial transparency (β=0.61, p<0.01), a result which gets stronger when the institutional environment is conducive, and regulations are enforced robustly (β_interaction=0.18, p<0.05). The improvements in financial transparency translate into higher investor confidence (+3.5%, p<0.05) and lower cost of capital (120 bps, p<0.01). These findings therefore lend evidence to the combined contribution of Institutional theory, Legitimacy theory, and Signaling theory, confirming that only an adoption, coupled with robust implementation and the existence of a conducive institutional environment, will ensure the IFRS adoption benefits to fully materialize. It provided meaningful recommendations to managers, regulators, and policymakers aimed at enhancing the quality of reporting and firm-level performance through increased investor confidence and better market efficiency. Limitations of the study included the absence of analysis over time and the lack of analysis including environmental, social, and governance (ESG) disclosure, providing new grounds for further research.