Corporate Governance and Initial Compliance with IFRS in Emerging Markets: The Case of Income Tax Accounting in Egypt.

• In Event: Audit Effectiveness and Market Reactions

Abstract

The paper examines the integration between corporate governance factors and the independent audit quality and their effect on compliance with IFRS recognition and disclosure requirements of income tax accounting in Egypt. Using the initial IFRS adoption in Egypt, the results show an evidence that the sophistication level of both company’s management and owners (as indicated by institutional ownership and foreign representation on the board) in integrated with the quality of the engaged auditor. This integration significantly improves compliance with IFRS requirements. Companies with higher levels of institutional ownership and foreign representation on the board are more likely to engage an audit firm with international affiliation and comply with IFRS recognition and disclosure requirements. The results underline the significance of professional development and regulations of local audit industries in emerging countries for actual compliance with IFRS requirements when they are officially adopted in these countries.

Authors

• Ahmed Ebrahim, Fairfield University

• Tarek Abdel Fattah, Mansoura University, Egypt