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Article
Publication date: 9 December 2019

Olfa Riahi and Walid Khoufi

The purpose of this paper is to discern the impact of main behavioral factors that could affect the decision of adopting IFRS in developing countries (DCs). In other…

Abstract

Purpose

The purpose of this paper is to discern the impact of main behavioral factors that could affect the decision of adopting IFRS in developing countries (DCs). In other words, this work looks to identify the different variables that are likely to influence the adoption of IFRS in these countries.

Design/methodology/approach

The methodological orientation of this research is to highlight and analyze the correlation between the cited factors and the IFRS adoption in DCs. Tested models are functions of logistic regression. To assess the parameters of these functions, the commonly used method is not that of ordinary least square but the maximum likelihood technique. In short, this study followed a hypothetical-deductive methodology by referring to the application of a logistic regression for each of the variables presumed to be analyzed. The authors implement this empirical model by using the neo-institutional approach and basing on a sample of 108 DCs.

Findings

The empirical results show that there exists a bidirectional causal relationship between the majority of the developed behavioral variables and the decision of whether adopting or unadopting IFRS by DCs. They also indicate through multivariate analysis that the selection of IFRS by DCs is primarily legitimized by institutional and social pressures (institutional isomorphism).

Research limitations/implications

It is essential to indicate that some limits might be assigned to the study. They are attached principally to the use of a dichotomous dependent variable which presents a restriction in a sense where the robust inequality at the level of the numbers of the countries of sub-samples can relatively weaken the findings. There are also few studies that jointly analyze the behavioral dimensions within a country and the adoption of IFRS. Institutional theory emanated from the research has proved useful in escaping this limit.

Practical implications

These empirical insights are of particular interest to local accounting standard setters of the selected countries since they can provide a better discernment of factors that can encourage the adoption of IFRS. Indeed, the research can be a reference for governments to better identify the economic, political and institutional obstacles that have an impact on behaviors which could compel countries to flee the adoption of IFRS. This paper will also be helpful for future research studying the links between human behavior and accounting in a general way. It should be noted that the results will be significant for future studies looking for real behavioral factors that drive a country to adopt an accounting framework. The studies will be able to use the empirical variables as a starting point and then they can extract new measures to identify the impact of behavior on decisions to adopt any standards.

Originality/value

At the present study, the authors strive to provide input to the literature by focusing on the determinants of the choice of an accounting practice in a DC reverberating to a new dimension which is the behavioral attribute.

Details

Journal of Applied Accounting Research, vol. 20 no. 4
Type: Research Article
ISSN: 0967-5426

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Article
Publication date: 20 April 2015

Rusdi Akbar, Robyn Ann Pilcher and Brian Perrin

This paper aims to explore the perceived drivers behind the implementation of performance measurement systems (PMSs) in Indonesian local government (ILG). It analytically…

Abstract

Purpose

This paper aims to explore the perceived drivers behind the implementation of performance measurement systems (PMSs) in Indonesian local government (ILG). It analytically assesses Indonesia’s attempt to introduce PMSs by addressing three research questions: Do organisations in developing countries actually use PMSs to aid decision-making and help plan for future performance improvement? (RQ1) Do the three isomorphic pressures exist in the development and use of PMSs? (RQ2) and If institutional isomorphism is evident, can accountability exist within the development and use of PMSs given these pressures? (RQ3).

Design/methodology/approach

This research explores the perceived drivers behind the implementation of performance measurement systems (PMSs) in Indonesian local government (ILG). It analytically assesses Indonesia’s attempt to introduce a PMS by addressing three research questions: RQ1 Do organisations in developing countries actually use PMSs to aid decision-making and help plan for future performance improvement? RQ2 Do the three isomorphic pressures exist in the development and use of PMSs? and RQ3 If institutional isomorphism is evident, can accountability exist within the development and use of PMSs given these pressures.

Findings

Results determined that although employees perceived coercive isomorphism as being a driver of ILG compliance with President B.J. Habibie’s presidential instruction (Inpres No. 7/1999), the Laporan Akuntabilitas Kinerja Institusi Pemerintah/Performance Accountability Report of State Apparatus (known as LAKIP), many councils were still not reporting and those who were, were not doing it well. Many councils lacked management motivation, with some choosing to merely mimic (mimetic isomorphism) what others were doing. Better-resourced councils made use of external consultants or local universities where knowledge was shared (normative isomorphism).

Practical implications

An understanding of factors influencing the development and use of performance measures, in turn, can be used not only to improve PMSs in the future but to improve the quantity and quality of LAKIP reporting.

Originality/value

The theoretical development and interpretation of this research is drawn from institutional theory with a major contribution being that it provides an in-depth conceptual overview and understanding of factors influencing the development and use of performance measures. Further, it fills a gap in the literature exploring PMSs and accountability in a developing country – in this case, Indonesia.

Details

Qualitative Research in Accounting & Management, vol. 12 no. 1
Type: Research Article
ISSN: 1176-6093

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Book part
Publication date: 1 March 2021

Henny Murtini, Djoko Suhardjanto, Djuminah Djuminah and Agung Nur Probohudono

The objective of the study is to prove the suitability between the implementation of human capital disclosures on the financial statements of local governments in…

Abstract

The objective of the study is to prove the suitability between the implementation of human capital disclosures on the financial statements of local governments in Indonesia and the political system, economic system, legal system, social and cultural system, and accounting infrastructure system based on institutional theory. The study is carried out by conducting a meta-analysis on human capital disclosure fit to institutional theory. The study finds that it is more appropriate using accounting infrastructure system for human capital disclosures on the financial statements of local governments in Indonesia. Based on a meta-analysis, it is found that the normative isomorphism is widely used in Indonesia. It should be implemented on human capital disclosures on the financial statements of local governments in Indonesia. Then, it is also found that there are many regulations on human capital but there are only a few human capital disclosures on the financial statements of local governments in Indonesia.

Details

Recent Developments in Asian Economics International Symposia in Economic Theory and Econometrics
Type: Book
ISBN: 978-1-83867-359-8

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Article
Publication date: 21 November 2016

Jeffry R. Phillips and Allan Y. Jiao

The purpose of this paper is to determine the extent to which constructs of institutional isomorphism apply to Los Angeles Police Department’s (LAPD) performance…

Abstract

Purpose

The purpose of this paper is to determine the extent to which constructs of institutional isomorphism apply to Los Angeles Police Department’s (LAPD) performance measurements of the US Department of Justice’s federal consent decree.

Design/methodology/approach

A case-study approach was used to gather and analyze the data, including documentary research, personal interviews, and observations.

Findings

The findings demonstrate that isomorphic pressures existed in the LAPD’s Audit Division and influenced the development of performance measures for reforms although not in a straightforward or unidimensional manner.

Originality/value

Police auditing in the context of the federal consent decree is shown to be a viable approach for institutionalizing police reforms, but further research is necessary on specific performance measurements of police operations and relationship between these measures and police effectiveness.

Details

Policing: An International Journal of Police Strategies & Management, vol. 39 no. 4
Type: Research Article
ISSN: 1363-951X

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Article
Publication date: 8 April 2014

Corina Joseph, Robyn Pilcher and Ross Taplin

This study aims to examine determinants of the extent of sustainability reporting on Malaysian local council web sites using a disclosure index within an institutional…

Abstract

Purpose

This study aims to examine determinants of the extent of sustainability reporting on Malaysian local council web sites using a disclosure index within an institutional theory framework.

Design/methodology/approach

Adopting a simplified disclosure index to measure the extent of sustainability reporting, the unit of analysis for this research is Malaysian local council web sites. To reduce any subjectivity, the disclosure index is unweighted and consists of 57 items.

Findings

Several findings were apparent including size, Local Agenda (LA) 21 and public sector award all being found to be significant predictors of disclosure. Overall, the findings indicate the presence of institutional isomorphism – particularly coercive pressure – in explaining the extent of sustainability reporting on web sites.

Research limitations/implications

The research has multiple implications as it provides insights into web site sustainability reporting in a developing country. It also adds support to institutional isomorphism as a valid theoretical framework within this context. Based on there being no mandatory requirement for local authorities to produce annual reports, one limitation is that this paper assumes that the web sites of local authorities are the primary medium for communicating sustainability information.

Practical implications

One of the most significant practical implications relates to LA 21 which has a significant impact on sustainability disclosure on Malaysian local council web sites. With 113 countries in total implementing LA 21 to some degree (ICLEI), Malaysia's recognition as a key (developing country) player in advancing sustainable development should be acknowledged.

Originality/value

With an apparent lack of web site sustainability reporting research in developing country public sector organisations, this study is unique in that it appears to be the first research conducted in Malaysia analysing sustainability web site reporting using a disclosure index in a local government setting – all within an institutional theory framework. Not only can the disclosure index be used as a tool for future public sector corporate social responsibility related research, but the “new” disclosure instrument provides insights into the extent of sustainability reporting in local authorities.

Details

Pacific Accounting Review, vol. 26 no. 1/2
Type: Research Article
ISSN: 0114-0582

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Article
Publication date: 11 March 2019

Alexander Glebovskiy

The purpose of this paper is to discuss the criminogenic nature of isomorphism and groupthink in business organisations with a view to developing a conceptual model of the…

Abstract

Purpose

The purpose of this paper is to discuss the criminogenic nature of isomorphism and groupthink in business organisations with a view to developing a conceptual model of the criminalisation process leading to criminal behaviour within businesses.

Design/methodology/approach

This paper draws on institutional theory and social psychology theory to discuss how isomorphic and groupthink processes may lead to criminal behaviour in the corporate world. The paper is based on a rigorous review of the relevant literature and theoretical frameworks regarding isomorphic dynamics, processes, factors, forces and mechanisms in the business context. The review was guided by a question of how isomorphic and groupthink processes can transform business organisations and its members into offenders. The approach applied was to transfer the existing theories of isomorphism and groupthink into the field of criminology, in order to devise a new model of the process of criminalisation.

Findings

The effects of isomorphic and groupthink processes can have a criminogenic effect on businesses and individuals in organisational settings which may coerce agents to engage in criminal behaviour. In crime-facilitative circumstances, isomorphism and groupthink foster criminal activity by cultivating homogeneous behaviour, conformity, resemblance, shared values and identical ways of thinking across and within firms. This herd behaviour can be regarded as one of the explanations for the pervasiveness of criminal and unethical behaviour in the corporate world, the consequences of which could be devastating.

Research limitations/implications

This is a theoretical analysis, not one based on empirical findings, though it does suggest a model for future testing.

Practical implications

This study explains the criminogenic nature of isomorphic and groupthink processes and contributes to the debate on the casualisation of corporate crime. This has important implications for the deterrence of illegal and unethical activities at both the organisational and institutional levels.

Originality/value

This study provides a conceptual model of the criminalisation process in businesses fostered by criminogenic isomorphism and groupthink.

Details

International Journal of Organization Theory & Behavior, vol. 22 no. 1
Type: Research Article
ISSN: 1093-4537

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Article
Publication date: 5 February 2018

Maarten Corten, Tensie Steijvers and Nadine Lybaert

This paper aims to examine whether a private firm’s demand for a Big4 auditor is influenced by the auditor choice of its main supplier, customer and competitor. The…

Abstract

Purpose

This paper aims to examine whether a private firm’s demand for a Big4 auditor is influenced by the auditor choice of its main supplier, customer and competitor. The authors rely on institutional theory to explain this stakeholders’ influence. The authors also examine whether the extent to which the firm’s board of directors engages in networking moderates this influence.

Design/methodology/approach

Questionnaire data are combined with archival data of 210 Belgian private firms with a statutory audit requirement. Logistic regression analysis is applied to examine to what extent firms follow their main competitor, customer and supplier in hiring a Big4 auditor.

Findings

The results reveal a positive association between the firm’s choice of a Big4 auditor and its main supplier being audited by a Big4 auditor, supporting the conformance effect (isomorphism) toward suppliers as hypothesized by institutional theory. The extent of board networking, however, seems to weaken this effect. Toward competitors, a divergence effect instead of a conformance effect is found, which indicates the existence of competitive differentiation regarding auditor choice.

Research limitations/implications

While prior studies mainly focus on the agency relationships between shareholders, debtholders and managers to explain auditor choice, this study also takes into account the firm’s other main stakeholders by relying on institutional theory. Both the conformance effect toward suppliers as well as the divergence effect toward competitors provide interesting additional perspectives on why auditors are demanded, leading to interesting future research opportunities.

Originality/value

This paper fulfills an identified need to consider additional theories in explaining audit outcomes.

Details

Managerial Auditing Journal, vol. 33 no. 2
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 2 January 2020

Salma Damak-Ayadi, Nesrine Sassi and Moujib Bahri

The purpose of this study is to identify the influence of environmental and institutional factors on the adoption of the International Financial Reporting Standard for…

Abstract

Purpose

The purpose of this study is to identify the influence of environmental and institutional factors on the adoption of the International Financial Reporting Standard for small and medium-sized entities (IFRS for SMEs). This study used the neo-institutional theory and the economic theory of networks to explain why countries choose to adopt IFRS for SMEs.

Design/methodology/approach

This study is based on logistic regression analysis to investigate 177 countries, including 77 jurisdictions that adopted IFRS for SMEs between 2009 and 2015.

Findings

The findings confirm that the adoption of IFRS for SMEs is significantly related to law enforcement quality, culture, trading networks and economic growth. At the institutional level, coercive and normative isomorphism was found to be positively associated with IFRS for SMEs adoption. The results show also that the quality of the audit has no significant effect on the adoption of IFRS for SMEs. However, the joint effect of the quality of audit and quality of law enforcement is significantly related to the adoption of IFRS for SMEs.

Practical implications

The study contributes to a better understanding of the factors influencing the implementation of IFRS for SMEs standard across the globe and could be used to predict a country’s decision to adopt this standard.

Originality/value

This study contributes to the literature on international accounting harmonization by examining both environmental and institutional factors that influence the adoption of IFRS for unlisted private companies.

Details

Journal of Financial Reporting and Accounting, vol. 18 no. 1
Type: Research Article
ISSN: 1985-2517

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Article
Publication date: 1 June 1999

Andreas I. Nicolaou

Examines sources of control over information system development decisions. Although past research has examined sources of internal organizational control that were solely…

Abstract

Examines sources of control over information system development decisions. Although past research has examined sources of internal organizational control that were solely determined by technical/rational goals, this article analyzes the symbolic role of social institutions in exerting control over system development decisions. Three regulatory mechanisms, developed by institutional theorists, are used to explain how specific social institutions exert their control. The mechanisms of coercive isomorphism, mimetic isomorphism and normative isomorphism help illustrate the types of social forces that enhance similarity of systems across organizations. Three conditions also are identified which moderate these effects: dependence on external institutions having control over an organization’s resources; unclear performance standards for system development; and interaction patterns during development. These conditions imply that social control would differ greatly according to whether the major influences on the process of system development arise from within the organization or are imposed from external institutions. The examination of symbolic/institutional forces in system development is useful in both the evaluation of system effectiveness and the assessment of the “appropriateness” of managerial interventions in the process. Future research should empirically examine these manifestations of social control and their influence on system development decisions.

Details

Information Technology & People, vol. 12 no. 2
Type: Research Article
ISSN: 0959-3845

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Article
Publication date: 6 February 2017

Mohammad Nurunnabi

The International Financial Reporting Standards (IFRS) have been adopted by 140 countries around the globe, including the G20 countries. Most of the prior literature…

Abstract

Purpose

The International Financial Reporting Standards (IFRS) have been adopted by 140 countries around the globe, including the G20 countries. Most of the prior literature focuses on adoption issues in developed countries. Due to the paucity of research on implementation issues in developing countries, the purpose of this paper is to explore the impediments of IFRS implementation in a developing country from 1998 to 2014 based on the auditors’ perceptions and documentary analyses.

Design/methodology/approach

Three rounds of interviews (2010, 2012, and 2014) from a total of 75 auditors (including 12 internal auditors and 13 external auditors) were conducted and enforcement documents from 1998 to 2010 were evaluated. The purpose of the three rounds of interviews was to explore the reflection on the changes which the interviewees have experienced over a five-year period.

Findings

Using institutional isomorphism, the results suggest that policy makers should focus on several factors to implement IFRS effectively, including low audit fees, a lack of qualified accountants, a lack of interest in IFRS by managers of some companies, a culture of secrecy, and a family-based private sector. Surprisingly, chartered accountancy firms are able to continue their work because of a culture of non-punishment for violating rules and the absence of any reliable exercising of due care or professional ethics in Bangladesh. Regulators such as the Bangladesh Securities and Exchange Commission (BSEC) and the Institute of Chartered Accountants of Bangladesh are not inclined to enforce actions against corrupt chartered accountant firms. This raises question about the professional integrity of auditors as well as regulators. Unlike, Albu et al. (2011) (World Bank as coercive) and Hassan et al. (2014) (western influence as coercive), the findings of this study imply that coercive isomorphism (regulatory authorities in Bangladesh) should be more proactive to ensure a successful implementation of IFRS.

Research limitations/implications

This study has some limitations, including transcribing information from Bengali to English and some enforcement documents were not available on the BSEC website. This last limitation is mitigated by the fact that a substantial number of enforcement releases (1,647 enforcement notices for a 13-year period) are analysed and three rounds of interviews were conducted.

Originality/value

The findings of this study contribute to, and advance the incremental knowledge of IFRS implementation issues and auditing literature in a developing country’s experience to policy makers (e.g. World Bank, IMF, Basel Committee, G20, IOSCO, and IFAC). The findings may be generalised to other developing countries that are facing effective implementation of IFRS.

Details

Journal of Accounting in Emerging Economies, vol. 7 no. 1
Type: Research Article
ISSN: 2042-1168

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