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The role of national culture in the adoption of International Financial Reporting Standards

The role of national culture in the adoption of International Financial Reporting Standards
The role of national culture in the adoption of International Financial Reporting Standards
We examine the relation between four cultural dimensions and countries’ decisions to adopt International Financial Reporting Standards (IFRS) around the world. Using a sample of 76 non-EU countries, we analyze IFRS adoption decisions during the period 2003-2014 to test the hypothesis that country differences in cultural traits can explain parts of the variation in countries’ decisions to adopt IFRS. We find that countries with higher levels of uncertainty avoidance are more likely to adopt IFRS. Additionally, they are more likely to commit to early adoption largely on a voluntary rather than mandatory basis. On the other hand, countries with higher values of masculinity are more likely to adopt IFRS early, but the extent (whether voluntary or mandatory adoption) of adoption is not significantly related to masculinity. The results, which are robust to a number of alternative explanations and specifications, suggest that differences in national culture had a significant role in countries’ reaction to the introduction of IFRS as a set of unified accounting standards targeting the harmonization of accounting standards adopted across different jurisdictions.
Culture, IFRS, Institutions, macroeconomic factors, accounting standards
0275-5319
1-19
Moataz El-Helaly, Moataz
9ad0ad1b-4aa0-4467-ae5b-d492face9470
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Soliman, Mark
c3b52c29-348f-41d3-a540-ba90d6657003
Moataz El-Helaly, Moataz
9ad0ad1b-4aa0-4467-ae5b-d492face9470
Ntim, Collins
1f344edc-8005-4e96-8972-d56c4dade46b
Soliman, Mark
c3b52c29-348f-41d3-a540-ba90d6657003

Moataz El-Helaly, Moataz, Ntim, Collins and Soliman, Mark (2020) The role of national culture in the adoption of International Financial Reporting Standards. Research in International Business and Finance, 54, 1-19, [101241]. (doi:10.1016/j.ribaf.2020.101241).

Record type: Article

Abstract

We examine the relation between four cultural dimensions and countries’ decisions to adopt International Financial Reporting Standards (IFRS) around the world. Using a sample of 76 non-EU countries, we analyze IFRS adoption decisions during the period 2003-2014 to test the hypothesis that country differences in cultural traits can explain parts of the variation in countries’ decisions to adopt IFRS. We find that countries with higher levels of uncertainty avoidance are more likely to adopt IFRS. Additionally, they are more likely to commit to early adoption largely on a voluntary rather than mandatory basis. On the other hand, countries with higher values of masculinity are more likely to adopt IFRS early, but the extent (whether voluntary or mandatory adoption) of adoption is not significantly related to masculinity. The results, which are robust to a number of alternative explanations and specifications, suggest that differences in national culture had a significant role in countries’ reaction to the introduction of IFRS as a set of unified accounting standards targeting the harmonization of accounting standards adopted across different jurisdictions.

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Accepted_RIBF_9_May_2020 - Accepted Manuscript
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Accepted/In Press date: 9 May 2020
e-pub ahead of print date: 20 May 2020
Published date: December 2020
Keywords: Culture, IFRS, Institutions, macroeconomic factors, accounting standards

Identifiers

Local EPrints ID: 441031
URI: http://eprints.soton.ac.uk/id/eprint/441031
ISSN: 0275-5319
PURE UUID: 1b150ce0-42c6-4f38-a685-06fcbacb3b8f
ORCID for Collins Ntim: ORCID iD orcid.org/0000-0002-1042-4056

Catalogue record

Date deposited: 27 May 2020 16:56
Last modified: 28 Nov 2021 05:01

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Contributors

Author: Moataz Moataz El-Helaly
Author: Collins Ntim ORCID iD
Author: Mark Soliman

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