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Corporate Governance Compliance Key to Success in Dominican Republic

A recent study has shed light on the importance of corporate governance compliance in the Dominican Republic. Researchers Nesrine Sassi and Salma Damak-Ayadi from the University of Carthage in Tunisia have found that the mandatory adoption of International Financial Reporting Standards for small and medium-sized enterprises (IFRS for SMEs) has a positive association with corporate governance index (CGI) and quality of financial statements (QFS).

Study Background

The study, published in the Journal of Accounting in Emerging Economies, examined the relationship between IFRS for SMEs adoption and CGI in two emerging countries, including the Dominican Republic. The researchers used structural equation modeling to analyze data from 2010 (pre-adoption) and 2016 (post-adoption). The sample covered a total of 22 small and medium-sized enterprises.

Key Findings

The findings show that the relationship between IFRS for SMEs adoption and CGI is mediated by QFS, meaning that the quality of financial statements plays a crucial role in this relationship. This suggests that companies that adopt IFRS for SMEs are more likely to have better corporate governance practices and higher-quality financial reporting.

Implications

The study’s authors argue that their findings provide important insights for standard setters and managers of small and medium-sized enterprises in emerging countries like the Dominican Republic. They highlight the need for companies to prioritize corporate governance compliance and improve the quality of their financial statements to ensure success.

Contribution to Literature

This research contributes to the growing body of literature on corporate governance in emerging economies, providing a valuable case study from the Dominican Republic. The study’s findings have implications for policymakers, regulators, and practitioners seeking to promote good corporate governance practices in these countries.

Article Details

The article is titled “IFRS for SMEs adoption, corporate governance, and quality of financial statements: evidence from Dominican Republic and El Salvador” and was published in the Journal of Accounting in Emerging Economies.