Publication Type

Journal Article

Version

submittedVersion

Publication Date

1-2006

Abstract

International Financial Reporting Standards (IFRS) have recently been adopted in a number of jurisdictions, including the European Union. Despite the importance of IFRS in the context of global accounting standards harmonization, little is known regarding what institutional factors influence countries' decisions to voluntarily adopt IFRS. This issue is relevant to standard-setters because a better understanding of the motivations for adoption will enable them to promote IFRS more effectively to countries that currently do not employ IFRS. Consistent with bonding theory, we find that countries with weaker investor protection mechanisms are more likely to adopt IFRS. Our evidence also shows that jurisdictions that are perceived to provide better access to their domestic capital markets are more likely to adopt IFRS. Taken together, our results are consistent with the view that IFRS represent a vehicle through which countries can improve investor protection and make their capital markets more accessible to foreign investors.

Discipline

Accounting | Finance and Financial Management

Research Areas

Corporate Reporting and Disclosure

Publication

Journal of International Accounting Research

Volume

5

Issue

2

First Page

1

Last Page

20

ISSN

1542-6297

Identifier

10.2308/jiar.2006.5.2.1

Publisher

American Accounting Association

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.2308/jiar.2006.5.2.1

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