Accounting Regulation, Institutional Environment, and Financial Market Development in West Africa: A Comparative Institutional Analysis

This study conducts a comparative institutional analysis of accounting regulation quality, institutional environment characteristics, and financial market development across West African countries, with Nigeria as the anchor case study. The institutional theory of accounting regulation posits that the effectiveness of accounting standards and enforcement mechanisms is conditioned by the surrounding legal, political, and economic institutions. West Africa presents a rich comparative context due to significant cross-country variation in legal tradition, regulatory capacity, and financial market sophistication among the ECOWAS member states. This study uses a novel database of accounting regulatory quality indicators for 15 West African countries developed through content analysis of IFRS adoption profiles, enforcement institutional capacity assessments, and World Bank governance indicators for the period 2010 to 2023. Financial market development is measured using stock market capitalization, private credit, and insurance penetration ratios. Comparative institutional analysis is combined with panel regression to test hypothesized relationships between regulatory quality and market development. Results establish that common law legal tradition, stronger property rights enforcement, and higher IFRS compliance quality are significantly and positively associated with financial market development across the region. Nigeria's relatively strong accounting regulation is found to be partially offset by enforcement inconsistency and political economy factors. The study contributes an original West African accounting regulatory quality index and institutional analysis framework, recommending ECOWAS-level harmonization of accounting regulatory standards.

Keywords: accounting regulation, West Africa, financial market development, comparative institutional analysis, IFRS.