An analysis of social factors influencing the adoption of International Financial Reporting Standards

Abstract

This paper examines the decision of 120 countries to permit or not to permit the use of l.nternational Finanrial Rep<>rting Sran<hrds (!FRS) foe listed companies incorporated within their borders. An empirical model is developed considering variables related to culture, political systems and «:onoiJl.ic systems of tbe countries. Le;w squares regressioa was used to e.~amine which ' 'ari:tbJes significantly influence the decision tc• allow the usc of lFRS. Tbe results from this rcgr<:SSion indicate ilut literacy niles and net impon activit)' positively influence tbe decision to allow £FRS. l...e:ss economically developed countries were also sbown to be more likely to allow lfRS. A model using tbc:se three variables was used to predict whether countries would allow lfRS. Tbe model was able to staristically improve on be prediction thai all eounrries would usc I FRS.

What Drives Developing and Transitional Countries to Adopt the IFRS for SMEs? An Institutional Perspective

“…This finding is consistent with the study of Kaya and Koch ( ). However, unlike previous studies (Archambault & Archambault, ; Judge et al, ; Zeghal & Mhedhbi, ), the research results indicate that EDUC (normative isomorphism) has no significant effect on IFRS for SMEs adoption in developing and transitional countries. Contrary to Kaya and Koch ( ), our findings reveal that FULLIFRS is a nonsignificant factor.…”

“…Most of the previous studies have focused on the analysis of factors influencing the full IFRS adoption by countries (Alon & Dwyer, ; Archambault & Archambault, ; Clements, Neill, & Stovall, ; Judge et al, ; Ramanna & Sletten, ; Shima & Yang, ; Zeghal & Mhedhbi, ). The main environmental factors highlighted by these researchers are: education, legal system, existence of a capital market, culture, import penetration, foreign aid, economic growth, governance quality, investor protection mechanisms, inflation, and tax system.…”

“…• Unlike developed countries with highly developed human capital, many developing nations suffer from a lack of qualified professionals, underdeveloped accounting profession, inadequate skills, and lack of expertise and training necessary to develop high-quality accounting standards such as IFRS/IFRS for SMEs (Albu et al, 2013;Archambault & Archambault, 2009;Zeghal & Mhedhbi, 2006 Exhibit 4…”

Adoption of International Standards on Auditing (ISA): Do Institutional Factors Matter?

“…It is often claimed that the international harmonisation of accounting and auditing standards can be beneficial to the development of an effective and efficient global economy through the provision of relevant and credible accounting information to users and markets (Radebaugh & Gray, ; Needles, Ramamoorti & Shelton, ; Zeghal & Mhedhbi, ; Smith, Sagafi‐Nejad & Wang, ; Archambault & Archambault, ; Leuz, ), culminating in significant attempts to bring convergence over the last decade. Yet, several studies have documented that there remains different levels of adoption and diffusion worldwide of international financial reporting standards (IFRS) (Zeghal & Mhedhbi, ; Leuz, ) arising from the different ways in which accounting developments interact with specific national economic, social, legal, cultural and political systems to generate particular accounting outcomes and/or practices.…”

Some Observations on Research on the Benefits to Nations of Adopting IFRS

“…The Japanese Accounting Review, 3 (2013), 1-19 16 21 A number of studies have related aspects of culture to the adoption of international accounting standards, for example McKinnon and Harrison (1985), Ding, Jeanjean and Stolowy (2005), Askary, Yazdifar and Askarany (2008), Archambault andArchambault (2009), andClements, Neill andStovall (2010). challenges: first, to reconcile conflicting findings, since the benefits are often disputed; and second, to expand the scope of our research to cover other important yet neglected areas.…”