IFRS adoption: a systematic review of the underlying theories

Abstract

Purpose

This paper aims to examine the theoretical underpinnings of international financial reporting standards (IFRS)-related studies and offers directions for theoretical and empirical research. Specifically, this study examines the main theories in IFRS adoption research (i.e. adoption, compliance and effects).

Design/methodology/approach

The sample contains 67 empirical papers that have used theories and was collected from Web of Science database. This study uses a systematic review technique.

Findings

Generally, the review shows the prevalent and pervasive use of institutional theories of isomorphism across all the three areas of IFRS adoption. Particularly, regarding IFRS adoption stream, this study finds the institutional theory as a dominant theory used to explain IFRS diffusion around the globe. For IFRS compliance, this study finds that the agency and the capital need theories are widely used. For IFRS adoption effects stream, this study finds a few studies using the contingency and neo-institutional theories. Overall, the review provides theoretical lens for IFRS adoption, IFRS compliance and IFRS adoption effects.

Originality/value

Given the lack of a well-defined set of theories in the domain of accounting, the findings provide further guidance on theory building within the field. Further, accounting regulators, academics and practitioners may benefit from the findings when explaining various changes in the world of accounting.

Citation

Agana, J.A., Zamore, S. and Domeher, D. (2023), "IFRS adoption: a systematic review of the underlying theories", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-08-2022-0317