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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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3 Characteristics of Full IFRS and IFRS for SMEs adoption


3Characteristics of Full IFRS and IFRS for SMEs adoption

3.1Research design

As explained in chapter one, this chapter presents a two-part descriptive analysis of de jure international accounting harmonization in the field of private firms in 110 countries. While time series analysis will display the process of Full IFRS and IFRS for SMEs adoption between 2002 and 2014, cross-sectional analysis provides insights into the status quo of local Full IFRS and IFRS for SMEs implementation in 2014. For reasons of presentation and comparability, both analyses will be conducted separately for the following nine geographic regions:

Before developing the conceptual foundation and presenting the empirical results of the descriptive study, the following section will briefly describe the process of data collection and the sample.

3.1.1Data collection and sample selection procedure

Country level analyses typically result in smaller sample sizes than firm level studies, which generally reduces the power of the empirical tests. However, country level data provide the basis for macro-level analyses and thus offer unique insights into country characteristics (Gordon et al. (2013), p. 146).

The United Nations (UN) count 193 member states as of July 2014 (United Nations (2014)). For the sake of completeness, this study adds three disputed sovereign states and fourteen jurisdictions with limited sovereignty to the list of UN member states. This leads to a total of 210 countries89 (and jurisdictions) representing the basic population of this study.


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