The adoption of IFRS for SMEs in the northern sector of Ghana: A case of structural equation modeling

Figures & data

Figure 1. Conceptual framework of the study.

Table 1. Level of awareness of IFRS for SMEs

Statement	Mean	SD
I am aware of the International Financial Reporting Standards (IFRS)	4.57	0.83
I know the IFRS are used for preparing financial statements?	4.04	0.87
I know there are various types of IFRS	4.25	0.79
I have heard of Full IFRS before	4.37	0.83
I have heard of IFRS for SMEs before	4.21	0.82
I know IFRS for SMEs is different from Full IFRS	4.10	0.92
I know Ghana has adopted IFRS for SMEs	4.19	0.78
I am aware there is no deferred tax exemption under IFRS for SMEs	3.10	0.62
I know that all research and development cost are expensed under IFRS for SMEs	4.04	0.79
I know that under IFRS for SMEs only the cost model is permitted for asset valuation	3.21	0.99
Mean of means/Average Standard Deviation	4.01	0.82

Scale: (1.00–1.49 = Fully not aware, 1.50–2.49 = Not aware, 2.50–3.49 = Neither aware or not aware, 3.50–4.49 = Aware, 4.50 − 5.00 = Fully aware)

Figure 2. Extent of IFRS adoption.

Table 2. Descriptive statistics of empirical data

Variables	N	Mean	Max	Min	SD	Excess Kurtosis	Skewness
Level of Awareness (LOA):	800	4.08	5	1	0.82	2.117	−0.889
IFRS Adoption (IFA):	800	4.15	5	1	0.79	1.263	−0.602
Level of Compliance (LOC)	800	4.23	5	1	0.89	2.494	−1.023
Challenges of IFRS adoption (COF)	800	4.19	5	1	0.98	2.103	−0.210
Coercive isomorphism (CIS)	800	3.59	5	1	0.51	3.041	−0.392
Mimetic isomorphism (MIS)	800	4.27	5	1	0.79	2.951	−0.893
Normative isomorphism (NIS)	800	4.21	5	1	0.81	1.902	−0.981
Environmental Factors (ENF)	800	4.32	5	1	0.92	2.107	−0.195

Table 3. Correlation matrix of the constructs

Constructs	LOA	IFA	LOC	COF	CIS	MIS	NIS	ENF	VIF
LOA	1.000								3.127
IFA	0.721***	1.000							4.289
LOC	0.684***	0.628***	1.000						3.821
COF	0.610***	0.645***	0.585***	1.000					3.951
CIS	0.569***	0.569***	0.524***	0.578***	1.000				4.216
MIS	0.541***	0.482***	0.439***	0.459***	0.541***	1.000			3.780
NIS	0.321***	0.369***	0.304***	0.219***	0.439***	0.431***	1.000		4.892
ENF	0.221***	0.283***	0.204***	0.187***	0.267***	0.328***	0.219***	1.000	3.218

***denote p < 0.05

Table 4. Results of validity and reliability of items constructs

Constructs	Indicators	Factor Loadings > 0.6	Cronbach’s Alpha >0.7	CR >0.7	Rho_ACP >0.7	AVE >0.5
Level of Awareness (LOA)			0.821	0.831	0.823	0.694
	LOA1	0.824
	LOA2	0.865
	LOA3	0.844
	LOA4	0.814
	LOA5	0.858
	LOA6	0.824
	LOA7	0.783
	LOA8	0.839
	LOA9	0.805
	LOA10	0.801
IFRS Adoption (IFA)			0.882	0.892	0.839	0.763
	IFA11	0.828
	IFA12	0.851
	IFA13	0.873
	IFA14	0.792
	IFA15	0.789
	IFA16	0.783
Level of Compliance (LOC)			0.829	0.837	0.891	0.693
	LOC17	0.802
	LOC18	0.823
	LOC19	0.818
	LOC20	0.843
	LOC22	0.821
	LOC23	0.839
	LOC24	0.801
Challenges of IFRS (COF)			0.813	0.817	0.831	0.643
	ENV25	0.789
	ENV26	0.823
	ENV27	0.789
	ENV28	0.843
	ENV29	0.769
	ENV30	0.783
	ENV31	0.788
Coercive Isomorphism (CIS)			0.842	0.822	0.889	0.712
	CIS32	0.858
	CIS33	0.892
	CIS34	0.871
	CIS35	0.858
	CIS36	0.840
Mimetic Isomorphism (MIS)			0.859	0.912	0.879	0.689
	MIS37	0.839
	MIS38	0.864
	MIS39	0.879
	MIS40	0.829
	MIS41	0.818
Normative Isomorphism (NIS)			0.842	0.821	0.851	0.731
	NIS42	0.785
	NIS43	0.794
	NIS44	0.802
	NIS45	0.791
	NIS46	0.809
Environmental Factors (ENF)			0.890	0.831	0.818	0.728
	ENF47	0.804
	ENF48	0.880
	ENF49	0.783
	ENF50	0.795

Table 5. Discriminant validity (fornell-larcker criterial)

Constructs	LOA	IFA	LOC	COF	CIS	MIS	NIS	ENF
LOA	0.731
IFA	0.657	0.721
LOC	0.601	0.635	0.738
COF	0. 627	0.690	0.654	0.748
CIS	0.667	0.578	0.652	0.630	0.719
MIS	0.612	0.621	0.528	0.340	0.427	0.781
NIS	0.689	0.389	0.431	0.219	0.367	0.631	0.701
ENF	0.589	0.431	0.410	0.289	0.389	0.451	0.313	0.728

Figure 3. Outcome of structural model.

Table 6. Heterotrait-monotrait ratio (HTMT)

Constructs	LOA	IFA	LOC	COF	CIS	MIS	NIS	ENF
LOA	0.817
IFA	0.785	0.813
LOC	0.612	0.743	0.722
COF	0.682	0.758	0.719	0.769
CIS	0.637	0.720	0.713	0.721	0.727
MIS	0.612	0.718	0.708	0.685	0.672	0.704
NIS	0.689	0.692	0.613	0.636	0.574	0.630	0.707
ENF	0.696	0.680	0.684	0.619	0.551	0.671	0.562	0.634

Table 7. Hypothesis testing results

Hypothesis	Relationship	Β	T-Statistics		Decision	R^2	Adj. R^2	Q^2	F^2
Direct Relationships
H1a	CIS—> IFA	0.843	11.812***		Supported	0.731	0.729	0.488	0.424
H1b	MIS—> IFA	0.457	20.126		Not Supported	0.791	0.788	0.565	0.483
H1c	NIS—> IFA	0.213	18.130		Not Supported	0.263	0.761	0.194	0.420
H1d	ENF—> IFA	0.789	12.869***		Supported	0.289	0.785	0.551	0.422
H2	COF—> IFA	0.713	10.839***		Supported	0.882	0.878	0.540	0.392
H3	COF—>LOA	0.738	12.639		Not Supported	0.159	0.754	0.492	0.426
Moderation Relationship
H1e	LOC*–>LOA -> IFA	0.689	18.612***		Supported
Goodness of fit of the Saturated Model
NFI >0.85				0.891
SRMR < 0.05.				0.017
d_ULS				1.123
d_G				1.067
Chi-Square.				2132.098