The impact of acculturation process and the institutional isomorphism on IFRS adoption

Abstract

PurposeThis study aims to explain why some countries have quickly embraced IFRS standards while others have partially adopted IFRS and others have been resisting using a model borrowed from social psychology that appeals to cultural differences.Design/methodology/approachAfter selecting a sample of 30 countries, the data were analyzed through hierarchical cluster analysis. The results indicate that the sampled countries are classified into seven categories according to the degree of application of international standards. The ordinal regression is used to identify cultural and institutional factors that influence the adoption of IFRS.FindingsThe findings show that interpersonal communication promotes the application of international standards while open-mindedness, ethnocentrism and knowledge of the host culture prevent the transition to a strategy of adoption. The authors have also found out an empirical support for the two institutional isomorphic pressures (coercive and mimetic) on the adoption of IFRS at the national level. While the opening to the international economy encourages countries to set a strategy of adoption, civil liberties and political rights, taxation and innovation impede such adoption.Practical implicationsThe study contributes to a better understanding of the factors influencing the implementation of IFRS. It provides to institutional theorists, accounting scholars and policymakers a cultural and institutional model for effective IFRS adoption conditions: promote intercultural interactions; master IFRS does not automatically mean applying them; encourage openness to the global economy; review the taxation system and accounting education programs and especially; and allow some flexibility for standard setters. This study can also assist regulators to verify their policies for the enforcement of IFRS. This paper will also be useful for future research studying the links between human behavior and the choice of new accounting standards through acculturation theory.Originality/valueThrough the acculturation theory, five new cultural dimensions developed by Ben Salem et al. (2019) are used for the first time to define the choice of accounting systems developed to international standards. This study empirically verified the predictive validity of these dimensions on the adoption of IFRS. Previous research have been based on the relationship between culture and disclosure using mainly the Hofstede dimensions. There is, therefore, a shortage of studies analyzing the culture and adoption of IFRS in individual countries. This study provides a cultural and institutional model of IFRS implementation conditions. Similarly, the research included taxation, which is not addressed by previous research, and their relevance in explaining the recourse to IFRS standards is confirmed.

IFRS innovation, governance practices and firm performance: A new empirical assessment of moderating effects across GCC region

“…It can be seen that adopting new settings is consistent with institutional theory, where international harmonization may interfere in the legitimacy of the firm. Ben Salem and Ayadi (2022) state that countries are more likely under pressure to coercive isomorphism to open in international economy; therefore, countries are encouraged to engage with international harmonization.…”

Modeling Emergent Variables to Assess the Adoption of Activity-Based Costing in Tanzania: The Application of Confirmatory Composite Analysis

“…The external forces related to imitating other organizational structures and operations are not explained in CT, see the complete license contents, please visit http://creativecommons.org/licenses/by-nc/4.0/ similarly to normative beliefs and coercive forces in general. According to Salem and Ayadi (2023), these missing external forces in CT are explained under the other arrangement of institutional isomorphism theory. The inclusion of external forces among the variables that explained ABC adoption necessitated the employment of institutional isomorphism theory to build the foundation on this matter.…”