Value Relevance of Selected IFRS-Accounting Numbers on core capital allocation decision of Listed Firms in Ghana

Notwithstanding the IFRS adoption’s demerits, its relevance remains not only a challenge for adherence in developing economies, but also research in the core capital allocation decision is still under-researched. This study examines the impact of relevant accounting information on the core capital allocation decision of Ghana Stock Exchange-listed firms in the context of IFRS adoption. The data of the study is obtained from the respective firms' websites from 2013 to 2023 of 176 year-observations, and using panel cointegration with the FGLS and PCSE estimators after testing for spatial dependence and heterogeneity. According to the findings, IFRS adoption, free cash flow from operations, and firm size have a considerable positive influence on the core capital allocation efficiency. There is evidence that bidirectional causation relationships prevailed between return on capital employed and core capital allocation in the long run, and a similar relationship exists between free cash flow and core capital allocation decisions in the short run, using the pooled mean group estimator technique. We apply panel cointegration of the second-generation technique, which serves as a novelty. Amidst the ascribed merits, the effect of IFRS adoption on core capital allocation in Ghana remains limited, pointing to a significant lacuna in the existing literature, as it has received broader attention in current research paradigms.