Factors affecting the development of accounting practices in Jordan: an institutional perspective

Abstract

Purpose Based on the institutional theory, the purpose of this paper is to examine institutional factors that affect the development of accounting practices in Jordan. Design/methodology/approach The current study surveys the perceptions of 306 participants and 20 interviewees. Findings First, the early formation of accounting practices in Jordan has been affected by the legacy of Ottoman Empire’s and the British Colony’s accounting systems. Second, the results indicate that government of Jordan (regulatory frameworks), pressures from international donors and large economic organizations (politico-economic factors), education and training/development (cultural inputs), and the efforts to attract foreign investments and getting access into the international fund and trade (economic factors) have been influential influences in the development of accounting practices and the adoption of International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) in Jordan. Finally, the findings reveal that “Secrecy” construct (a culture input) has been a problematic in the implementation of IAS/IFRS. Practical implications The current study provides policy implications for the Jordanian policy makers and for other developing countries that are working hard to improve the quality of financial reporting of their business entities. Finally, the authors suggest some great opportunities for future research. Originality/value First, this paper contributes to Jordan’s policy developments including fundamental strategies in terms of attracting foreign investments to expand the economy and the international and regional trade. Second, it fills a gap in the international accounting research by empirically assessing how institutional factors affect the development of accounting practices in emerging country such as Jordan.

Institutional theory and IFRS: an agenda for future research

“…Those nations are deemed to be responding to coercive pressures stemming from the regulatory requirements of major international agencies, such as the World Bank and International Monetary Fund (IMF). Similar results were found by Tahat, Omran, and AbuGhazaleh (2018) in the case of Jordan, where pressures exerted by these international donors were identified has a significant coercive pressure. Normative and mimetic pressures exerted by Big 4 accounting firms and the UAE's trading partners were identified (Irvine, 2008).…”

“…As Mir and Rahaman (2005) argue, a highly problematic aspect of the adoption of IFRS centres on the process of implementation. In emerging and developing economies, the educational processes during implementation of IFRS is very significant in embedding new practices because those countries generally have a lower-skilled cohort of accounting professionals (Albu et al, 2013;Albu et al, 2014;Nurunnabi, 2015;Tahat, Omran, & AbuGhazaleh, 2018). Additionally, if undemocratic decision processes exclude interested parties and a coordinated structure is absent (Mir & Rahaman, 2005), this can result in corruption, weak enforcement mechanisms, and low levels of compliance with IFRS (Nurunnabi, 2015).…”

The impact of fair value estimates on audit fees: evidence from the financial sector in Jordan

“…Jordan is a developing but politically stable Arab nation with an open market economy and strong socio-economic ties with other countries. Over the last two decades, the government has embarked on different financial market reforms to improve Jordan's reputation as an open economy (Tahat et al, 2018) and ensure economic stability. Of all the Middle Eastern countries, Jordan is considered the most competitive and liberal, due to its adoption of more liberal policies to improve the national economy.…”

Determinants ofde jureadoption of international financial reporting standards: a review

“…Therefore, the borrowing economy is subject to contractual agreement from these International financial reporting standards nongovernmental lending/donating organizations that are seeking to bring about change through foreign aid (Hassan et al, 2014). Consequently, countries requiring foreign aid to develop infrastructure normally have little choice but to adopt IFRS, as it is often a condition of funding (Mir and Rahaman, 2005;Tahat et al, 2018). Encouraging the adoption of IAS is evidence of how international lenders, through their lending activities, are influencing accounting practices globally (Mir and Rahaman, 2005).…”

“…Furthermore, Mir and Rahaman (2005)'s research on Bangladesh found that the pressure exerted by key international donor/lending institutions on the Bangladeshi government was a major factor driving the decision to adopt IAS. Tahat et al (2018) recently showed that pressure from international donors has pushed Jordan to adopt IFRS.…”