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Journal of Management and Governance
Erschienen in: Journal of Management and Governance 3/2018

12.03.2018

Legitimacy theory may explain the failure of global adoption of IFRS: the case of Europe and the U.S.

verfasst von: Francesco De Luca, Jenice Prather-Kinsey

Erschienen in: Journal of Management and Governance | Ausgabe 3/2018

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Abstract

We investigate the reasons why “adoption” of one set of globally accepted accounting standards is presently unachievable. By “adoption” we mean that a jurisdiction incorporates IFRS instantly as its national accounting as issued by the IASB. We state that the IASB has used a Legitimacy Theory strategy to gain acceptance of its standards by more than 120 countries across the globe but it has only gained pseudo-“adoption” (not as published by the IASB) of its standards by many countries. We contend that achieving policing and enforcement of its standards globally has proven to be empirically illusive. This legitimacy deficit may explain why convergence between the IASB and FASB is currently idle. We offer a possible solution to bridging the legitimacy gap of global adoption of IFRS. We propose an internationally respected regulator and suggest the IOSCO for this role through its participation in the IFRS Foundation Monitoring Board for policing and enforcement of IFRS for cross-listed firms reporting in compliance with IFRS so that the IASB’s output legitimacy may be achieved globally.
Vorheriger Artikel Special issue on governance and accounting regulation 2018
Nächster Artikel Agency conflicts, executive compensation regulations and CEO pay-performance sensitivity: evidence from Sweden

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Fußnoten
1
This same clarification was issued by the FASB and SEC with the Release 2008-234.
 
2
Source: IOSCO website.
 
3
Source: Memorandum of Understanding to strengthen the institutional framework of the International Financial Reporting Standards Foundation (2013a, b), Article III, par. 6.
 
4
“A foreign private issuer means any foreign issuer other than a foreign government except an issuer that meets the following conditions: (1) more than 50% of the issuer’s outstanding voting securities are directly or indirectly held of record by residents of the United States; and (2) any of the following: (i) the majority of the executive officers or directors are United States citizens or residents; (ii) more than 50% of the assets of the issuer are located in the United States; or (iii) the business of the issuer is administered principally in the United States” (SEC 2007, 2).
 
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Metadaten
Titel
Legitimacy theory may explain the failure of global adoption of IFRS: the case of Europe and the U.S.
verfasst von
Francesco De Luca
Jenice Prather-Kinsey
Publikationsdatum
12.03.2018
Verlag
Springer US
Erschienen in
Journal of Management and Governance / Ausgabe 3/2018
Print ISSN: 1385-3457
Elektronische ISSN: 1572-963X
DOI
https://doi.org/10.1007/s10997-018-9409-9

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