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Full IFRS and IFRS for SMEs Adoption by Private Firms

Empirical Evidence on Country Level


Maximilian Saucke

The issuance of the International Financial Reporting Standard for Small and Medium-sized Entities (IFRS for SMEs) in July 2009 has mixed up the bipolar financial reporting landscape between Local Generally Accepted Accounting Principles (GAAPs) and Full IFRS by adding a third dimension to international GAAP choice. The study examines the characteristics and determinants of Full IFRS and IFRS for SMEs adoption by private firms in 110 countries. It finds empirical evidence for the continued existence of local versions of IFRS and the worldwide emergence of a two standard system. The findings also suggest that while Full IFRS adoption was mainly driven by network effects and political pressures, countries adopt the IFRS for SMEs notably due to cost-benefit considerations.
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1.6.3 Explanatory country level studies on GAAP adoption


1.6.3Explanatory country level studies on GAAP adoption

The question why countries adopt IFRS or at least converge their national accounting systems with IASB standards has been discussed by accounting experts since the early 1970s. Hence, the following analysis of prior research cannot include all studies, which have been conducted on the drivers and impediments of Full IFRS and IFRS for SMEs adoption by countries worldwide. It rather contains the most relevant literature to this particular study (esp. theory-based, archival, and cross-country studies). IFRS

The review of prior research on the determinants of Full IFRS adoption by countries is divided into four different research fields: (1) economic factors, (2) political factors, and (3) network effects, as well as (4) national culture. The allocation of studies to one of these four research areas is not always clear, as most conceptual studies discuss more than one reason for or against Full IFRS adoption. The same holds true for the majority of archival studies. Nevertheless, the reviewed studies are classified into one of the four given areas according to their main research focus. Within each of the four research fields, the primary focus of the analysis will be on prior archival cross-country studies, as they are of higher relevance to this study due to the similar research design. Hence, archival studies will be discussed in more detail than conceptual analyses and normative policy recommendations. factors

According to Hauworth (1973), the need for...

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