THE EFFECT OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) ADOPTION ON FINANCIAL PERFORMANCE IN ETHIOPIA: EMPIRICAL EVIDENCE FROM SELECTED COMMERCIAL BANKS.

Abstract

The primary objective of this study was to investigate the effect of International Financial Reporting Standards (IFRS) on financial performance of the selected commercial banks in Ethiopia. To achieve this purpose, descriptive Gray’ comparability index and one sample t-test method has been employed to test whether there is a significant effect of IFRS implementation on Financial performance indicators of ROA and ROE as well as on earning per share of the commercial banks. The study used secondary data over the period 2015 to 2020. The research design use descriptive and explanatory or An Ex-Post Facto Design has been adopted in order to achieve the objectives of the study. A purposive sampling technique is used to select sample of the study. The study found a significant positive effect of IFRS adoption on financial performance measured by return on asset (ROA) and earning per share. The study also found a significant negative effect of IFRS adoption on financial performance measured by return on equity of the commercial banks.