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|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|59||2012||18 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Accounting, Organizations and Society, Volume 37, Issue 7, October 2012, Pages 482–499
Common explanations for the voluntary adoption of International Financial Reporting Standards (IFRS) have been based on economic efficiency arguments. This paper introduces new theoretical arguments to explain how institutional pressures influence decisions to adopt IFRS voluntarily. Through recourse to an institutional theory context, we combine the analytical framework proposed by Oliver (1991) with the concept of institutional logics, and apply this framework to the financial accounting field for the first time. This combined model shows how multiple forms of rationality constrain company responses to pressures to adopt a new accounting regime. We find that companies in a code law country are willing to change from a code-law institutional logic to a common-law institutional logic if they consider such a change will have positive overall benefits to them. Companies assess the net benefits of change after considering the legitimacy they achieve with IFRS, the consistency of IFRS with their goals and institutional context, and the loss of autonomy they believe they are likely to sustain from adopting IFRS. Contrary to predictions in earlier formulations of institutional theory, we find that the acquiescence of companies in adopting IFRS is not a blind response to institutional demands, but is largely predictable by virtue of the inherent nature and importance of such institutional pressures to them. Prevailing institutional logics are shown to provide important insights to the decisions of companies to adopt IFRS voluntarily. We draw on our results to contend that a company’s acquiescence to institutional pressures to adopt IFRS occurs notwithstanding that they can also contemplate more active strategies (through decoupling).
Globalization of financial and commercial operations has provided strong incentives for the adoption of International Financial Reporting Standards (IFRS) throughout the world. Empirically, the principal motives for adopting IFRS have been explained in terms of a quest for economic efficiency. Here we investigate whether broader motives have been influential too. Our argument is consistent with a more encompassing view that to survive “[o]rganizations need to achieve not only technical, operational efficiency but also social legitimacy” (Abernethy & Chua, 1996, p. 571). To accommodate this broader view, we use an institutional perspective to examine the voluntary adoption of IFRS by companies. We contend that institutional theory can render useful insights in analysis of decisions by companies to adopt IFRS, by revealing the complexity of their responses to important external pressures and environmental constraints. In the 1990s many studies investigated the specific characteristics of firms which had adopted non-local GAAP voluntarily − in particular, with respect to decisions to adopt International Accounting Standards, the forerunner to IFRS (Al-Basteki, 1995, Dumontier and Raffournier, 1998, El-Gazzar et al., 1999 and Murphy, 1999). However, these studies tended not to take account of differing institutional settings. More recent studies of reasons for choosing non-local GAAP have begun to explore the institutional settings in which companies operate (such as the level of legal protection of investors, quality of national accounting standards, development of financial markets, and aspects of legitimacy) (Collin et al., 2009, Cuijpers and Buijink, 2005, Francis et al., 2008, Renders and Gaeremynck, 2007 and Touron, 2005). This study continues in that vein by invoking an institutional perspective to argue that the adoption of organizational practices is influenced by the institutional environment (Scott, 2001) and by the view of rationality that is inherent in the institutional logics prevailing where organizations are situated (Thornton, Ocasio, & Lounsbury, 2012). For empirical support, we combine the strategic response model proposed by Oliver (1991) with the concept of institutional logics to examine reasons for the voluntary adoption of IFRS by large Portuguese companies. Consistent with Grafton, Abernethy, and Lillis (2011), we argue that Oliver’s model allows us to relax the assumption that organizational choices are driven purely by economic rationality. We extend theory by contending that the strategic behavior of organizations is constrained by a meaning of rationality that is defined by their dominant institutional logics. This argument is used in the context of recent developments in institutional analysis: in particular, to ideas of practice variation and resistance that are grounded in the concept of institutional logics (Lounsbury, 2007, Lounsbury, 2008, Marquis and Lounsbury, 2007 and Thornton and Ocasio, 2008). Specifically, we seek to better understand why unlisted companies in Portugal decided to adopt IFRS voluntarily, rather than to maintain the [then existing] regime of Portuguese Accounting Standards. In doing so, we analyze how strategic choice of accounting standards is constrained by the institutional logics of large companies, especially regarding the process of accounting harmonization. Our central thesis is that an organization’s choice among different accounting standards regimes (that is, different institutional forms) represents a strategic response to institutional pressures; and that such response is constrained by broader taken-for-granted rationales associated with the use of IFRS. We respond to the call in this journal by Carpenter and Feroz (2001, p. 593) to engage in research that “might be fruitfully directed to investigating Oliver’s strategic response model [by] … incorporating institutional variables in a statistical model of the GAAP decision-making process.” Although some of the studies that have used Oliver’s (1991) framework have provided supporting evidence (Abernethy and Chua, 1996, Carmona and Macías, 2001, Clemens and Douglas, 2005, Etherington and Richardson, 1994, Goodstein, 1994, Hyvönen et al., 2009, Ingram and Simons, 1995, Jamali, 2010, Milliken et al., 1998 and Modell, 2001), Oliver’s strategic response model has never been applied in the financial accounting field. Applications of this model in the accounting field have been confined to empirical settings in public organizations like hospitals, universities and other state-owned organizations. In the present study the focus is on private firms and on the financial accounting field. The circumstance of whether or not companies adopt IFRS voluntarily is used as an empirical research setting for the first time to explore Oliver’s strategic response model. Such a focus is important because the diffusion of IFRS worldwide has not been a consensual process. Rather, it has been grounded largely in the International Accounting Standards Board’s (IASB) vision of international standardization as being primarily to service the needs of investors (Suddaby, Cooper, & Greenwood, 2007). The suitability of applying this vision, and this grounding, to all types of companies, and to all countries has been questioned in numerous studies (Alp and Ustundag, 2009, Chand and Patel, 2008, Irvine, 2008 and Mir and Rahaman, 2005). Despite such questioning, large companies have adopted IFRS voluntarily over the years. Accordingly, further understanding of the institutional conditions that have influenced large unlisted companies to adopt IFRS voluntarily is needed. Thus, Oliver’s framework is beneficial in facilitating the investigation of how institutional conditions and organizational interests influence the selection of a particular response to pressures to adopt a regime of accounting standards. This study contributes to the literature in four principal ways. First, we address criticism of institutional theory for downplaying the role of agency and interest in organizational decision processes (Covaleski and Dirsmith, 1988, DiMaggio, 1988, Oliver, 1991, Powell, 1991 and Scott, 1987). Oliver’s model is an ideal mechanism for addressing such a criticism because of its fundamental theoretical proposition that conformity or resistance by organizations to institutional pressures is a strategic choice affected by organizational interests. Second, we overcome the much criticized instrumental rationality of Oliver’s model (Goodrick & Salancik, 1996; Lounsbury, 2008, Scott, 2001 and Seo and Creed, 2002) by incorporating the role of institutional logics in examining the scope conditions under which organizations are willing to respond to institutional pressures. In doing so, we extend theoretical knowledge by considering the institutional logics that constrain organizational decision making. Third, we extend prior research empirically. Little is known about the institutional conditions that motivate voluntary adoption of IFRS, and how companies respond to those conditions. Despite many arguments advanced to explain voluntary adoption of IFRS, there has been little exploration of the influence of institutional environments on the choice and diffusion of IFRS. Oliver’s model is useful in fostering analysis of the predictive institutional factors that influenced the purposive action of large Portuguese unlisted companies in exercising their discretion to select between different regimes of accounting standards. The analysis conducted here should enhance knowledge of the scope conditions that underpin voluntary adoption of IFRS. Fourth, we highlight that voluntary adoption of IFRS is a strategic response that reflects the relative importance companies allocate to different institutional elements. In particular, we highlight how acquiescence to institutional elements occurs notwithstanding the possibility of allowing for avoidance strategies (decoupling). The results presented are based upon responses to a questionnaire survey sent to the 474 largest Portuguese unlisted companies during September 2009. This was four months prior the adoption of the new Portuguese accounting system based on IFRS. We find that voluntary adoption of IFRS by large Portuguese unlisted companies generally was acquiescence to institutional demands; and that it was not an act of unthinking or reflexive conformity. Rather, voluntary adoption of IFRS was a strategic response involving pro-active choice and reflecting prevailing institutional logics. Our results also reveal that a company’s decision to adopt IFRS depended on the cause, the constituents, the content and the context of institutional pressures. The willingness of an unlisted Portuguese company to adopt IFRS depended on the legitimacy the company sought through the adoption of these standards (cause), the fact of being a subsidiary of a multinational company (constituents), the consistency of IFRS with the company’s organizational goals (content), and whether the company’s institutional context had high levels of environmental uncertainty and interconnectedness (context). When these institutional antecedents prevail, large Portuguese companies were willing to change from a code-law institutional logic inherent [then] in Portuguese Accounting Standards, to a common-law institutional logic inherent in IFRS. Portuguese companies were willing to make this change despite the loss of autonomy they believed they would sustain by adopting IFRS (content). This positive trade-off between legitimacy, consistency with constituents’ expectations, organizational goals and institutional context, and higher constraints on decision-making, also helped to overcome the resistance that large Portuguese companies were expected to have in adopting IFRS. Such resistance was expected to be prompted by concerns about applying an institutional logic that was significantly different from the rules-based, conservative and tax-influenced Portuguese accounting system. The following section discusses the theoretical background of the study. Thereafter, we develop hypotheses, specify data collection procedures, define the model, explore explanatory variables, present the results and offer conclusions.
نتیجه گیری انگلیسی
Two important matters are highlighted as a consequence of our incorporation of a theoretical framework grounded in institutional theory to investigate organizational and environmental factors affecting the voluntary adoption of IFRS. First, is the relevance of Oliver’s (1991) framework in explaining the relationship between institutional pressures for voluntary adoption of IFRS and the strategic responses of large Portuguese unlisted companies. Second, is how institutional logics associated with the use of IFRS enable and constrain organizational decisions regarding GAAP. Additionally, we have identified which strategic response best describes voluntary adoption. Multivariate analysis of the cause of institutional pressures reveals a strong relationship between the legitimacy perceived from the use of IFRS and voluntary adoption of IFRS, consistent with H1. Thus, adoption of IFRS is perceived as a way for organizations to increase prestige by demonstrating social fitness. Nonetheless, social fitness is shaped by prevailing institutional logics. Large corporations have followed the development of the international accounting harmonization process closely, and they have been important stakeholders in IASB activities (Larson & Kenny, 2011). IFRS are regarded by their institutional constituents to be superior standards, providing high quality accounting information. Given such expectations, IFRS have gradually become the accounting institutional logic that prevails for large companies. As expected when selecting accounting standards, large organizations acknowledge that prestige is likely to be enhanced from the adoption of IFRS due to the consistency of IFRS with the dominant ideology for accounting in their organizational field. Accordingly, organizations accommodate institutional pressures (acquiescence) by adopting an accounting system that signals their financial statements are high quality and transparent. Additionally, adoption of IFRS is consistent with economic rationales underpinning the choice of accounting standards by large companies. The choice they make provides them with procedural legitimacy (Suchman, 1995) by aligning their practices with expectations of appropriate accounting procedures in rationality contexts. We also found that subsidiaries of multinational corporations are more likely to adopt IFRS voluntarily, consistently with H2. This supports the resource-dependence contention of institutional theory: that dependent organizations are less likely to resist the demands of organizations on whom they depend (DiMaggio, 1988 and DiMaggio and Powell, 1983). Empirical results reinforce the importance of the institutional antecedent content in explaining voluntary adoption of IFRS. Univariate and multivariate analyses reveal that firms with parent listed companies (H3.1), and which find adoption of the SNC more timely (H3.2), are more likely to adopt IFRS voluntarily. Consistent with Hyvönen et al. (2009), we find that institutional logics of accounting practices are most influential when they complement organizational goals. The willingness of organizations to respond to institutional pressures to adopt IFRS increases when institutional logics associated with IFRS are seen as easily taken-for-granted by organizations. For subsidiaries of listed companies, IFRS have been part of their rationales for accounting practices since 2005, principally because IFRS facilitate consolidation of accounts and the harmonization of internal information. Additionally, companies which have welcomed the imposition of the SNC acknowledge the advantages of a principles-based (institutional logic) approach and its consistency with their objectives. This lends extra support to findings that acquiescence is more likely when organizations respond to institutional demands that are consistent with their goals (Ingram & Simons, 1995). Companies adopting IFRS voluntarily assign a lower degree of autonomy to IFRS in their organizational decision-making than do companies adopting the national accounting system. This is contrary to hypothesis H4. However, the relative importance of significant explanatory variables (as assessed by inspecting odds ratios) reveals that the level of discretionary constraints imposed by IFRS is a much less important variable in explaining voluntary adoption of IFRS than the variables relating to legitimacy, listing status of the parent company, opinions about the timeliness of the SNC, environmental uncertainty, and sector interconnectedness. This suggests that large Portuguese companies confer different degrees of importance on the institutional antecedents that constrain their choice of GAAP: they acknowledge that the advantages of adopting IFRS (such as enhanced legitimacy and consistency with constituents’ expectations and organizational goals) outweigh any loss of ensuing decision-making autonomy. The limited capacity of organizations to predict the evolution of some environmental factors (H6) seems to encourage voluntary adoption of IFRS. Burchell et al. (1980, p. 17) argue that when there is poor cause/effect knowledge, organizations rely on accounting “ammunition machines” to demonstrate effectiveness; and that these accounting systems “become mechanisms around which interests are negotiated, counter claims articulated and political processes explicated.” Because organizations are constituted as coalitions of interests, rather than as cohesive mechanisms for rational action, companies operating in highly uncertain environments are more willing to comply with institutional demands (and adopt IFRS) as a means for uncertainty reduction. Thus, organizations cope with environmental uncertainty by providing financial statements that comply with high quality standards (such as IFRS) in the hope that this will cause constituents to have higher confidence in their financial statements and financial performance. Results also reveal that companies with low levels of operational risk (contrary to H6) are more willing to adopt IFRS. This seems likely to be due to companies with low levels of technical failure and human error being better placed to face the conversion process to IFRS – a process that involves changes in their complex structures and an analysis of accounting effects over a wide range of operations. Thus, companies with low operational risk appear to be more confident in engaging in such a demanding process. Companies belonging to industries that are more organized are more likely to adopt IFRS voluntarily (H7), consistent with results that acquiescence strategies are associated with a high connectedness to the environment and strong cooperation among firms from the same industry (Clemens and Douglas, 2005 and Goodstein, 1994). Because organizational interconnectedness promotes collective identity, institutional logics prevailing within these organized industry groups specify the appropriate accounting practices. In turn, this interconnectedness promotes consensus regarding the adequacy of IFRS. Univariate and bivariate analysis revealed that control through diffusion of IFRS is also important in explaining responsiveness to institutional demands to adopt IFRS. Companies adopting IFRS voluntarily are aware of a higher degree of international diffusion of these standards when compared to non-adopting companies. Opinions about diffusion of IFRS reveal the relative embeddedness of adopting companies within the institutional logic of IFRS; and in regarding IFRS-endorsed accounting practices as taken-for-granted. However, the significance of this variable was diluted in the context of the model. A key finding of this study is that when organizations face institutional pressures of different strengths, they actively choose the pressures they want to comply with. Results reveal that large Portuguese companies were willing to change from a code-law institutional logic that has its roots in the legal role of the State, to a common-law (IFRS) institutional logic, that is anchored on the accounting profession. Such a change is motivated by the interests of companies in enhancing legitimacy, meeting their constituents’ expectations and organizational goals, overcoming environmental uncertainty and being consistent with the requirements of a highly interconnected environment, notwithstanding the higher constrain of organizational decisions imposed by IFRS. However, change of accounting logics implies changes of the meaning of rationality (Thornton and Ocasio, 2008 and Thornton et al., 2012). Portuguese organizations had their values and accounting practices anchored on a code-law logic that has shaped their repertoires of action over the years. Adoption of IFRS implies a shift of cognition, that is, of how individuals and organizations understand the meaning of these standards. This is a longstanding process that, until it is fully attained, provides opportunity for loose coupling. Thornton et al. (2012) suggest that loose coupling is one way for organizations to deal with the pressures of conflicting logics of different institutional orders. Results of our study are consistent with this idea. Our analysis has explored different strategic responses. If all hypotheses had been confirmed this would indicate that voluntary adoption by large Portuguese companies represents total obedience to institutional requirements. However, we found that significant results with respect to the constraint and (operational) uncertainty hypotheses had a different sign to that predicted. Such a result is beneficial in helping us to appreciate that the strategies companies exhibit in response to pressure to adopt IFRS are located along a continuum between conformity and active resistance, as suggested by Oliver (1991). Generally, voluntary adoption of IFRS is an acquiescence response to institutional demands. Nonetheless, such a response can also include avoidance strategies (such as loose coupling) or more active strategies (consistent with Table 1). This suggests that further investigation of any “ceremonial” use of IFRS by companies is warranted. Strategically, organizations may adopt IFRS voluntarily, given their low operational risk, but have a loose coupled application of IFRS. Thus, they might maintain the regime of accounting standards detached from accounting practices, particularly when the requirements imposed by IFRS differ most from code-law logic. Prior studies of voluntary adoption of IFRS have not incorporated the demands of the institutional environment in which organizations are embedded. Consistent with the arguments of Abernethy and Chua (1996) and Modell (2001), the findings confirm that acquiescence by companies is not an unconscious response to institutional demands. Rather, it is a strategic response driven by organizational agency that is moderated by institutional logics (Thornton, 2002). When organizations promote self-interests and actively choose the pressures to which they want to acquiesce, their interests, values and assumptions are embedded in prevailing institutional logics (Thornton & Ocasio, 2008). So, instead of regarding organizational conformity to institutional demands to be an outcome of institutional pressures (DiMaggio and Powell, 1983 and Meyer and Rowan, 1977), conformity should be regarded as a strategic response that is largely predictable by the inherent nature of institutional pressures (Oliver, 1991); and, more importantly, by assessments of the relative importance of such pressures made in accordance with prevailing institutional logics. Our findings confirm that institutional theory offers a powerful theoretical framework for exploring the diffusion of institutional practices; and that Oliver’s (1991) framework is useful in analyzing how organizational responses to institutional pressures translate into the diffusion of IFRS, especially when allied with an institutional logic approach. The further understandings provided here should assist stakeholders and policymakers to better understand the motives for companies to acquiesce to demands to adopt IFRS. Our findings should be read with the caution that the size of the sample (although in line with those in similar types of surveys) limits generalizability. The application of Oliver’s (1991) framework to study of the voluntary adoption of IFRS implies a degree of subjectivity in the operationalization of the five institutional antecedents. This aspect requires additional research and refinement. Future research should investigate how the voluntary adoption of IFRS can benefit from the integration of institutional and economic perspectives; and should assess the importance of each of these factors in motivating the voluntary adoption of regimes of accounting standards. The joint use of institutional and economic theories has the potential to yield more robust and more generalizable results (Bealing, 1994). Many beneficial insights would also accrue from analyzing how companies belonging to countries with code-law institutional logics translate IFRS into accounting practices; and how the new accounting practices are institutionalized by companies over the time. Such research could refine understanding of Oliver’s model in the field of financial accounting by, for example, assessing whether effective conformist or loose coupled practices represent the responses that adopters exhibit in the application of IFRS; and by assessing the motivations that lead organizations to decouple for strategic reasons.