VALUE RELEVANCE OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) AND SHAREHOLDERS WEALTH MAXIMISATION: EVIDENCE FROM BANKS IN GHANA.

The paper estimated value relevance of IFRS compliance of banks in Ghana from the perspective of shareholders. Queku?s four-multidimensional model was used to measure IFRS compliance. To achieve the stated objective, the paper formulated univariate models, two-variable models, three-variable and four-variable models for the investigations. Audited financial statements of sampled Ghanaian banks were the main source of data from 2008 to 2014. Predictive approach and coefficient of determination were the main approaches employed in the estimations. It was found that IFRS compliance has value relevance to shareholders of banks in Ghana. Implication of this finding is that IFRS based financial statements provide accounting data relevant to predicting shareholders? wealth of the banks. It also revealed that although the predictive models of all the IFRS constructs were significant; IFRS accounting quality which is one of the most widely cited construct of IFRS compliance was found to be irrelevant in this paper. The irrelevance of accounting quality evident in the study may reflect weakness in some recognition and measurement criteria of IFRS as it is measured directly from the financial statements. It is recommended that institute of chartered accountants Ghana should review the recognition and measurement criteria of each IFRS to determine whether or not adjustments are required to their implementation. The value relevance studies only show the predictive power, therefore future researchers should use the multidimensional model to estimate the direction of value relevance of each of the constructs so as to determine the economic consequence of this value.