<abstract xmlns="http://www.w3.org/1999/xhtml">

<p>This paper investigates the dynamics of market synchronicity and International Financial Reporting Standards (IFRS) adoption in Africa. It seeks to determine whether or not IFRS is an augmentor or inhibitor of market synchronicity in Africa. This study is not only a foundational study that unfolds the dynamics of market synchronicity and IFRS adoption in Africa but also extends the scope of synchronicity from firm-level assessment to country-level market synchronicity. It is one of the few studies which have shifted the literature on synchronicity from one largely limited to firm-level synchronicity to country-level synchronicity through analyses of cross-border market synchronisation. It employs Dynamic Ordinary Least Square (DOLS) and Generalised Method of Moments (GMM) to investigate the market synchronicity-IFRS nexus. The study uses monthly data from March 2005 to November 2021 in five African markets: Botswana, Ghana, Namibia, Nigeria, and South Africa generating 1005 observations in an 18-year data span. The paper reveals a significant negative consequence of IFRS on market synchronicity. Thus, IFRS exhibits an inhibition role in market synchronicity (reduces synchronicity) and improves price informativeness. A decreasing pattern was also observed immediately after IFRS was adopted by the stock markets and persisted for about five years. It implies that the price informativeness of stock markets through IFRS makes them good candidates for intra-Africa portfolio diversification due to reduced investors’ risk exposure to market synchronicity.</p>
</abstract>

This paper investigates the dynamics of market synchronicity and International Financial Reporting Standards (IFRS) adoption in Africa. It seeks to determine whether or not IFRS is an augmentor or inhibitor of market synchronicity in Africa. This study is not only a foundational study that unfolds the dynamics of market synchronicity and IFRS adoption in Africa but also extends the scope of synchronicity from firm-level assessment to country-level market synchronicity. It is one of the few studies which have shifted the literature on synchronicity from one largely limited to firm-level synchronicity to country-level synchronicity through analyses of cross-border market synchronisation. It employs Dynamic Ordinary Least Square (DOLS) and Generalised Method of Moments (GMM) to investigate the market synchronicity-IFRS nexus. The study uses monthly data from March 2005 to November 2021 in five African markets: Botswana, Ghana, Namibia, Nigeria, and South Africa generating 1005 observations in an 18-year data span. The paper reveals a significant negative consequence of IFRS on market synchronicity. Thus, IFRS exhibits an inhibition role in market synchronicity (reduces synchronicity) and improves price informativeness. A decreasing pattern was also observed immediately after IFRS was adopted by the stock markets and persisted for about five years. It implies that the price informativeness of stock markets through IFRS makes them good candidates for intra-Africa portfolio diversification due to reduced investors’ risk exposure to market synchronicity.

Market Synchronicity Among African Markets: is IFRS Adoption an Augmentor or Inhibitor?

ECONOMICS

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

This paper investigates the dynamics of market synchronicity and International Financial Reporting Standards (IFRS) adoption in Africa. It seeks to determine...

Market Synchronicity Among African Markets: is IFRS Adoption an Augmentor or Inhibitor?

Publicado en línea: 13 mar 2024

Páginas: 29 - 49

Recibido: 29 ene 2024

Aceptado: 11 abr 2024

DOI: https://doi.org/10.2478/eoik-2024-0006

Palabras clave
Market synchronicity, International Financial Reporting Standards (IFRS), Market-wide synchronicity, firm-level synchronicity, Dynamic Ordinary Least Square (DOLS), Generalised Method of Moments (GMM)

© 2024 Yaw Ndori Queku et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Market Synchronicity Among African Markets: is IFRS Adoption an Augmentor or Inhibitor?

Publicado en línea: 13 mar 2024

Páginas: 29 - 49

Recibido: 29 ene 2024

Aceptado: 11 abr 2024

DOI: https://doi.org/10.2478/eoik-2024-0006

Palabras claveMarket synchronicity, International Financial Reporting Standards (IFRS), Market-wide synchronicity, firm-level synchronicity, Dynamic Ordinary Least Square (DOLS), Generalised Method of Moments (GMM)

© 2024 Yaw Ndori Queku et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.

Palabras clave
Market synchronicity, International Financial Reporting Standards (IFRS), Market-wide synchronicity, firm-level synchronicity, Dynamic Ordinary Least Square (DOLS), Generalised Method of Moments (GMM)