Stockholders versus Stakeholders: Unintended Effects of IFRS Adoption

• In Event: Emerging Research Papers

Abstract

The push to converge international accounting standards has in recent years become an overwhelming chorus. The world’s leading economic powers have adopted International Financial Reporting Standards (IFRS) or agreed to converge national standards with IFRS. Even the United States, a reluctant participant at best, has begun extensive efforts to converge U.S. GAAP with IFRS in the issuance of new standards. It seems clear that the IASB goal of creating a “single set of high-quality, understandable, enforceable and globally accepted financial reporting standards” has become a widely accepted, if not universal, goal for all (IFRS 2013).
This movement, however, toward globalization of accounting standards may have other effects, unintended and unforeseen, beginning with changes in the way business is conducted within adopting countries and including significant changes in national culture. IFRS are primarily the product of western countries and western cultures. As a result, they incorporate certain biases that may not be fully realized by non-western countries embracing IFRS.
We propose that the globalization of accounting standards is an outside influence that is changing cultural values. The changes, in fact, are occurring more rapidly than anticipated by existing models of national culture. Our study explores changes occurring in business assumptions and operations with related effects on national culture.

Authors

• Jeanne Yamamura, University of Nevada, Reno

• Michimasa Satoh, Aichi Gakuin University