To Adopt or Not to Adopt? The Transnational Adoption of International Financial Reporting Standards (IFRS) in Africa

The idea that policy diffusion can occur via two different mechanisms has gained attention in the realm of international accounting since the European Union’s adoption of International Financial Reporting Standards (IFRSs) in 2005. Proponents of classical economic approaches to policy adoption argue that countries adopting IFRS are motivated solely by the economic consequences of the standards from which they anticipate an improvement in information quality. Neo-institutional scholars argue, on the other hand, that institutional and social pressures from both internal and external sources propel actors to adopt the standards. While each narrative can independently explain IFRS adoption, they can also overlap, creating a pecking order effect in explaining IFRS adoption particularly in developing countries. In Africa, a majority of countries have not yet adopted IFRSs despite calls by international organizations to do so. The purpose of this dissertation project was to analyze the logics behind the diffusion and adoption of IFRSs in Africa and to develop an institutional explanation for the adoption or non-adoption of IFRS in selected African countries. The project investigates why many African countries resist adopting IFRSs, looking at the factors that foster or limit IFRS adoption and the role actors at transnational and local levels play. Methodologically, the project employs a qualitative comparative analytic approach with case studies of selected African countries. It compares the case of countries that have already adopted the standards following similar effects from the European Union and Countries have not yet adopted. It concludes that, although institutional economics play a crucial role in the adoption of IFRS in western countries, Neo-institutional arrangements such as institutional pressures of coercion, normative professional pressures coupled with the presence or absence of essential institutions to support adoption better explains IFRS adoption/non-adoption in Africa

To Adopt or Not to Adopt? The Transnational Adoption of International Financial Reporting Standards (IFRS) in Africa

The idea that policy diffusion can occur via two different mechanisms has gained attention in the realm of international accounting since the European Union’s adoption of International Financial Reporting Standards (IFRSs) in 2005. Proponents of classical economic approaches to policy adoption argue that countries adopting IFRS are motivated solely by the economic consequences of the standards from which they anticipate an improvement in information quality. Neo-institutional scholars argue, on the other hand, that institutional and social pressures from both internal and external sources propel actors to adopt the standards. While each narrative can independently explain IFRS adoption, they can also overlap, creating a pecking order effect in explaining IFRS adoption particularly in developing countries. In Africa, a majority of countries have not yet adopted IFRSs despite calls by international organizations to do so. The purpose of this dissertation project was to analyze the logics behind the diffusion and adoption of IFRSs in Africa and to develop an institutional explanation for the adoption or non-adoption of IFRS in selected African countries. The project investigates why many African countries resist adopting IFRSs, looking at the factors that foster or limit IFRS adoption and the role actors at transnational and local levels play. Methodologically, the project employs a qualitative comparative analytic approach with case studies of selected African countries. It compares the case of countries that have already adopted the standards following similar effects from the European Union and Countries have not yet adopted. It concludes that, although institutional economics play a crucial role in the adoption of IFRS in western countries, Neo-institutional arrangements such as institutional pressures of coercion, normative professional pressures coupled with the presence or absence of essential institutions to support adoption better explains IFRS adoption/non-adoption in Africa

The State of IFRS in Africa: Is IFRS in Disarray?

textabstractWhy should Africa adopt IFRS? Adoption is less of the story – not practising what you preach is the greater evil

International Accounting Standards in Africa: Selective Recursivity for the 'Happy Few'?

This study explores recursivity in international accounting standard-setting, focusing on participation of actors from African countries. While the International Financial Reporting Standards (IFRS) Foundation bases its legitimacy claims as a global standard-setter on a combination of expertise and a formally transparent set of recursive procedures for consultation of stakeholders, empirical results show that participation in the latter is geographically very uneven. The article argues that conceptual mismatch between the standard-setter's objectives on the one hand and the socio-economic, cultural and political conditions in many African countries on the other leads to selective recursivity that is problematic for the former's legitimacy and effectiveness. These findings are of wider relevance for debates on global standard-setting and development