Network Effects in Countries’ Adoption of IFRS

By K. Ramanna, E. Sletten. 2014

184 citations recorded by the source corpus.

ABSTRACT: If the differences in accounting standards across countries reflect relatively stable institutional differences, why did several countries rapidly adopt IFRS in the 2003–2008 period? We test the hypothesis that perceived network benefits from the extant worldwide adoption of IFRS can explain part of a country's shift away from local accounting standards. We find that perceived network benefits increase the degree of IFRS harmonization among countries and that smaller countries have a differentially higher response to these benefits. Further, economic ties with the European Union are a particularly important source of network effects. The results, robust to numerous alternative hypotheses and specifications, suggest IFRS adoption was self-reinforcing during the sample period, which, in turn, has implications for the consequences of IFRS adoption. Data Availability: Most data are available from public sources identified in the text; hand-collected data are available upon request.

Subfields: Accounting, Management Information Systems

View Paper: https://www.semanticscholar.org/paper/cb8e376adae8d369174b02c856a50fe9eeece3c2

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

1. Xi Li
2. Emmanuel T. De George
3. L. Simone
4. L. Shivakumar
5. Gwen Yu
6. Aida Sijamic Wahid
7. Ray Ball
8. Valeri V. Nikolaev

In Management Information Systems

1. L. Simone
2. L. Shivakumar
3. Gwen Yu
4. Aida Sijamic Wahid

Citations in the corpus

• Accounting Standards and International Portfolio Holdings (2014, methodology): “10 We collect the country’s IFRS adoption status and the country-level adoption year from Ramanna and Sletten (2014).”
• A review of the IFRS adoption literature (2016, background): “One possible explanation identified by Ramanna and Sletten (2014) is that IFRS adoption is self-reinforcing. The perceived benefits from adopting IFRS to lower cross-border transaction costs increase for a given country as more jurisdictions with economic ties to that country adopt IFRS. Ramanna and”
• Does a common set of accounting standards affect tax-motivated income shifting for multinational firms? (2016, background): “Ramanna and Sletten (2014) examine economic network effects and decisions to permit or require IFRS.”