How does the mandatory International Financial Reporting Standards (IFRS) adoption influence accounting-based measures of performance in firms of PSX: The Complementary function of the CG Index?


  • Wisal Ahmad, Yousaf Khan, Arif Hussain, Shah Wali Khan, Zahoor Khan
  • DOI


IFRS adoption, accounting-base performance, CG Index, Agency issue, Principle Component Analysis (PCA), PSX.


The purpose of this paper is to study the effect of IFRS adoption on the accounting base performance in Pakistani non-financial registered firms in the presence of moderating influence of the CG index. We use internal financial reporting standards (IFRS) as an independent variable, accounting base performances (ROA & ROE) as a dependent variable, Corporate governance index (CGI) as a moderator, and an index through PCA constructed for the corporate governance mechanism. IFRS is a dummy variable, and the firm size, growth in sales, and financial leverage as control variables. The sample of this study is obtained from the PSX-100 index, containing the top & highest-ranked fifty nonfinancial firms from 2013 to 2022. The study employs various estimators including Pooled OLS, Random Effects, and Fixed Effects to ascertain which model well predicts outcomes. The Fixed Effects Model estimates better coefficients than the others in light of respective tests. The results demonstrate that IFRS and accounting-based performance are positively associated. It has also come to know that CGI has positively moderated the association of IFRS and Accounting base performance. Policymakers are required to focus accounting policies and standards mainly on the firms in highly competitive industries to get maximum progress there from. Moreover, they also need to formulate the best financial strategies and improve anti-trust laws to upturn the level of competition in all industries in the context of Pakistan. This study has an immense influence on encouraging non-adopter countries to adopt IFRS for the transparency of financial information.

Author Biography

Wisal Ahmad, Yousaf Khan, Arif Hussain, Shah Wali Khan, Zahoor Khan






Articles (Peer-reviewed)