Antecedents and Consequences of the Worldwide Diffusion of Accounting Innovations: The Case of International Accounting and Auditing Standards

This thesis examines the antecedents and consequences of the worldwide adoption of international accounting innovations by applying diffusion of innovation theory. Specifically, this study investigates the relative impacts of four key national antecedents, including legal, political, cultural and educational factors on the adoption of international accounting and auditing standards, by using a panel dataset consists of 3,240 observations, covering 162 countries over 1995-2014. Additionally, this study also examines the influences of adopting international accounting and auditing standards on the economic consequences of the adopting countries, by using a sample consists of 185 countries, covering 3,700 observations between 1995 and 2014.

This study provides great theoretical and methological contributions to the current literature by applying Diffusion of Innovation (DOI) theory as a main theory, which has not yet been employed to explain the antecedents and consequences of adopting international accounting innovations. Moreover, this study adds a big contribution to the existing ISAs empirical research, since there has been very little empirical research conducted so far to investigate the anteceddents and consequenses of adopting ISAs by buliding upon the empirical research that done by past IFRS studies. Furthermore, the present study makes a significant contribtion to the existing IFRS research by including four key national antecedents, including legal, political, cultural and educational factors, which have not been done before, alongside with using a wide range of economic consequenses of IFRS adoption, while past IFRS studies included very few indicators.

The results of this study show that legal and educational factors have the highest power on the early adoption of international accounting innovations. Particularly, the findings indicate that countries with the following legal antecedents are more likely to be the early adopters of international accounting innovations, including English common law, Socialist civil law, strong shareholder protection laws, strong legal integrity and higher levels of judicial efficiency and independence. In addition, the results show that countries with higher levels of educational attainment and literacy rates, along with lower levels of education quality are more likely to be the early adopters of the international accounting innovations. However, the findings suggest that the results relating to national political and cultural antecedents are generally mixed. Specifically, the results demonstrate that countries with weak levels of governance indictors, including voice and accountability, political stability, regulatory quality, and control of corruption are more susceptible to become early IFRS adopters, whilst the levels of voice and accountability and political stability, are found to be lower in countries that adopted ISAs early. Similarly, the findings indicate that countries with higher levels of cultural values, including individualism index, indulgence index,and long-term orientation index, alongside with lower level of uncertainty avoidance, power distance and masculinity index are more likely to be early IFRS adopters, whilst long-term orientation index is found to be higher for early ISAs adopters.

Finally, the results report that most economic indicators have significantly increased after the early adoption of ISAs, including economic growth, FDI, GDP, exports, imports, inflation and real interest rates. while, only three economic factors have significantly improved after the early adoption of IFRS, namely economic growth, FDI and real interest rates. In return,the levels of other three economic indicators have significantly increased post the mandatory adoption of IFRS, including GDP, import and export levels.