Network Effects in Countries’ Adoption of IFRS

Posted: 6 Feb 2014

See all articles by Karthik Ramanna

Karthik Ramanna

Harvard University - Business School (HBS); University of Oxford - Blavatnik School of Government

Ewa Sletten

The Ohio State University

Multiple version iconThere are 2 versions of this paper

Date Written: November 9, 2013


If the differences in accounting standards across countries reflect relatively stable institutional differences, why did several countries rapidly adopt IFRS in the 2003-2008 period? We test the hypothesis that perceived network benefits from the extant worldwide adoption of IFRS can explain part of countries’ shift away from local accounting standards. We find that perceived network benefits increase the degree of IFRS harmonization among countries and that smaller countries have a differentially higher response to these benefits. Further, economic ties with the European Union are a particularly important source of network effects. The results, robust to numerous alternative hypotheses and specifications, suggest IFRS adoption was self-reinforcing during the sample period, which, in turn, has implications for the consequences of IFRS adoption.

An older unpublished version of the paper is available at 1590245.

Keywords: diffusion, IASB, IFRS, international trade, network effects

JEL Classification: M41, M44

Suggested Citation

Ramanna, Karthik and Sletten, Ewa, Network Effects in Countries’ Adoption of IFRS (November 9, 2013). Accounting Review, Forthcoming, Available at SSRN:

Karthik Ramanna (Contact Author)

Harvard University - Business School (HBS) ( email )

Boston, MA 02163
United States

University of Oxford - Blavatnik School of Government ( email )

10 Merton St
Oxford, Oxfordshire OX1 4JJ
United Kingdom

Ewa Sletten

The Ohio State University ( email )

Fisher Hall
2100 Neil Avenue
Columbus, OH 43210
United States
6142922451 (Phone)

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