Impact of the economic, social and cultural environment of countries on the adoption of international financial reporting standards

Heydar, Mohammad; Taherabadi, Ali Asghar; Jamshidinavid, Babak; Ghanbari, Mehrdad

doi:10.22034/iaar.2021.134618

Impact of the economic, social and cultural environment of countries on the adoption of international financial reporting standards

Document Type : Original Article

Authors

Mohammad Heydar ¹

Ali Asghar Taherabadi ²

Babak Jamshidinavid ³

Mehrdad Ghanbari ⁴

¹ Department of Accounting, Kermanshah Science and Research Branch, Islamic Azad University, Kermanshah, Iran.

² Department of Accounting, kangavar Branch, Islamic Azad University, kangavar, Iran.

³ Assistant Professor of Accounting, Department of Accounting, Islamic Azad University, Kermanshah

⁴ Assistant Professor of Accounting, Department of Accounting, Islamic Azad University, Kermanshah Branch

10.22034/iaar.2021.134618

Abstract

The aim of this study is to investigate the effect of environmental factors on international financial reporting standards (IFRS) Adoption across countries. Environmental factors in this study include the existence of capital market, economic growth, economic openness, legal system, education level and cultural indicators such as power distance, individualism, masculinity and uncertainty avoidance. The sample of this study consists of 93 countries in during 2016. Data has been examined using binary logistic regression analysis. The results indicate that countries with a capital market and common law system, as well as countries with a high level of education and power distances and low level of economic growth, individualism and uncertainty avoidance, are more willing to adopt IFRS. Also, the economic openness and masculinity did not significantly affect the acceptance of IFRS.

Keywords

IFRS

Economic Growth

Economic Openness

Legal System

Cultural Indicators