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

Authors: Jeffrey J. Archambault, Marie E. Archambault

Addresses: Division of Accountancy and Legal Environment, Lewis College of Business, Marshall University, One John Marshall Drive, Huntington, WV 25755, USA. ' Division of Accountancy and Legal Environment, Lewis College of Business, Marshall University, One John Marshall Drive, Huntington, WV 25755, USA

Abstract: This paper examines the decision of 120 countries to permit or not to permit the use of International Financial Reporting Standards (IFRS) for listed companies incorporated within their borders. An empirical model is developed considering variables related to culture, political systems and economic systems of the countries. Least squares regression was used to examine which variables significantly influence the decision to allow the use of IFRS. The results from this regression indicate that literacy rates and net import activity positively influence the decision to allow IFRS. Less economically developed countries were also shown to be more likely to allow IFRS. A model using these three variables was used to predict whether countries would allow IFRS. The model was able to statistically improve on the prediction that all countries would use IFRS.

Keywords: international accounting; IFRS adoption; social factors; culture; political systems; economic systems; IFRS use prediction; net imports; resource dependence; economic development; literacy; International Financial Reporting Standards.

DOI: 10.1504/JGBA.2009.023093

Journal for Global Business Advancement, 2009 Vol.2 No.1/2, pp.38 - 53

Published online: 09 Feb 2009 *

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