Tensions between politico‐institutional factors and accounting regulation in a developing economy: insights from institutional theory

Abstract

The study contributes to building an understanding of the impact of political forces on the information environment of listed firms in a developing economy. Specifically, it investigates the tensions between politico‐institutional factors and accounting regulation on the prolonged and incomplete implementation of the International Financial Reporting Standards (IFRS) in Bangladesh from 1998 to 2010. Two phases of interviews were conducted in 2010–2011 and IFRS‐related enforcement documents from 1998 to 2010 were evaluated. The study contributes that IFRSs are being diffused to developing countries like Bangladesh, but they invariably interact with local institutions (political institutions in this case), with variable outcomes (i.e. negative outcomes of IFRS implementation). Coercive, normative and mimetic isomorphisms are low in Bangladesh. Notably, political forces have been undermining mimetic isomorphism because of the high level of government intervention and the high level of political lobbying. Political institutional pressures stand in the way of mimetic isomorphism and constitute negative forces that add further tension to accounting regulation (e.g. the implementation of IFRS) in Bangladesh. Regarding the low level of normative isomorphism, there is evidence of a ‘blame culture’, with state institutions and professional accountancy institutions in the country blaming each other for the poor progress in IFRS implementation. Although the study focuses on Bangladesh, its results have implications for international policy makers (the International Accounting Standards Board, the International Monetary Fund and the World Bank), as well as the governments and regulators of other developing economies facing similar challenges in implementing IFRS.

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An empirical investigation into the relationship between sustainability and supply chain compliance within the South African Public and the private sector

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CSR in Afghanistan: a global CSR agenda in areas of limited statehood

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