Explaining Accounting Policy Practices Under IFRS: The Role of Institutional Factors

49 Pages Posted: 17 Nov 2016 Last revised: 25 Nov 2016

See all articles by Elena de las Heras

Elena de las Heras

Universidad Autónoma de Madrid

José António Cardoso Moreira

cef.up / Faculdade de Economia / Universidade do Porto

Patrícia Andrea Bastos Teixeira Lopes Couto Viana

Universidade do Porto

Date Written: November 15, 2016

Abstract

We argue and document that persistent institutional factors determine managerial accounting policy practice under IFRS. In an analysis of accounting choice across thirteen European countries, we study both overt and covert choices, aggregating them to measure their impact over income, thereby focusing on firm overall accounting strategy and not only on individual choices. Our results indicate that institutional factors significantly explain the observed heterogeneity in accounting policy practices and that firm characteristics have a smaller role in explaining them. Capital market structure and tax-alignment are particularly important factor in driving accounting practice. Contrary to the recent emphasis on enforcement as a key institutional factor, our evidence indicates it is a second order factor, when controlling for other institutional factors.

Keywords: Accounting policy practices, International differences, IFRS, institutional factors, managerial reporting incentives

JEL Classification: M41, M44, M47

Suggested Citation

de las Heras, Elena and Cardoso Moreira, José António and Bastos Teixeira Lopes Couto Viana, Patrícia Andrea, Explaining Accounting Policy Practices Under IFRS: The Role of Institutional Factors (November 15, 2016). Available at SSRN: https://ssrn.com/abstract=2869902 or http://dx.doi.org/10.2139/ssrn.2869902

Elena De las Heras (Contact Author)

Universidad Autónoma de Madrid ( email )

Avda. Fco. Tomas y Valiente 5
Madrid, Madrid 28049
Spain

José António Cardoso Moreira

cef.up / Faculdade de Economia / Universidade do Porto ( email )

Rua Dr. Roberto Frias
4200-464 Porto
Portugal

Patrícia Andrea Bastos Teixeira Lopes Couto Viana

Universidade do Porto ( email )

Rua Dr. Roberto Frias
4200-464 Porto
Portugal

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
106
Abstract Views
969
rank
281,038
PlumX Metrics