Formal and informal institutional pressures and public sector financial reporting quality: Evidence from Ghana

Abstract

This study examines how formal and informal institutional pressures influence public sector financial reporting quality in Ghana. Despite ongoing public financial management reforms, challenges such as weak enforcement of standards, inconsistent disclosures, and limited transparency continue to undermine reporting quality. Existing research has largely emphasised technical and administrative determinants, with limited attention to the role of institutional pressures in shaping reporting behaviour. Grounded in Institutional Theory, the study adopts a quantitative approach and collects data from 344 senior finance officers across ministries, departments, and agencies in Ghana. Structural Equation Modelling (SEM) is employed to analyse the relationships between regulatory environment, government structure, societal expectations, stakeholder expectations, and financial reporting quality. The results indicate that government structure and societal expectations significantly enhance financial reporting quality, while the regulatory environment and stakeholder expectations have no significant direct effects. The study contributes to institutional theory by demonstrating that formal and informal pressures exert unequal influence in a developing-country public sector context. It also extends public sector accounting literature by providing large-sample empirical evidence from Ghana. The findings suggest that improving reporting quality requires strengthening governance structures, enhancing civic accountability mechanisms, and improving enforcement capacity.

Keywords: {'name': 'Institutional Dynamics'}, {'name': 'Regulatory Environment'}, {'name': 'Societal Expectations'}, {'name': 'Government Structure'}, {'name': 'Stakeholders Expectations'}, {'name': 'Financial Reporting Quality'}, {'name': 'Public Sector'}, {'name': 'Ghana'}

Authors & affiliations

Eyram Adzo Nyamuame
Accra Institute of Technology

Eric Hope
KAAF University

Constance Phyllis Puttick
KAAF University

Edward Annan
KAAF University

Mensah Marfo
KAAF University

Francis Kofi Sobre Frimpong
KAAF University

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