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- Title
Legitimacy theory may explain the failure of global adoption of IFRS: the case of Europe and the U.S.
- Authors
De Luca, Francesco; Prather-Kinsey, Jenice
- 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.
- Subjects
EUROPEAN Union countries; UNITED States; INTERNATIONAL accounting standards; INTERNATIONAL Financial Reporting Standards; INTERNATIONAL Accounting Standards Board; ACCOUNTING standards; LOBBYING
- Publication
Journal of Management & Governance, 2018, Vol 22, Issue 3, p501
- ISSN
1385-3457
- Publication type
Article
- DOI
10.1007/s10997-018-9409-9