Network effects in countries' adoption of IFRS
By: Karthik Ramanna, Ewa Sletten
Contributors: Sletten, Ewa; Harvard Business School
Edition: Rev.
Series: Working paper / Harvard Business School -- 10-092; Working paper (Harvard Business School) -- 10-092.
Publisher: Harvard Business School
Published: 2010
Place of publication: [Boston]
Language: eng
Number of pages: 46
Description: If a country's accounting standards represent a political-economic equilibrium, why is that equilibrium for some countries shifting over time in favor of IFRS? We develop and test the hypothesis that perceived network benefits from the extant worldwide adoption of IFRS influences a country's shift away from local accounting standards. That is, as more jurisdictions with economic ties to a given country adopt IFRS, perceived benefits from lowering transactions costs to foreign financial-statement users come to outweigh institutional differences (e.g., auditing technology) that make IFRS adoption costly. We find that perceived network benefits increase the degree of IFRS harmonization among countries, although larger countries and countries less dependent on foreign trade have a differentially lower response to these perceived benefits.
Notes: "April 2010, revised September 2010"--Publisher's website.

Includes bibliographical references.