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Examining the Impact of Vulnerability and the Law of Justice on the IFRS Adoption Decision

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  • Khandokar Istiak

    (Department of Economics, Finance and Real Estate, University of South Alabama, Mobile, AL 36688, USA)

  • John Reid Cummings

    (Department of Economics, Finance and Real Estate, University of South Alabama, Mobile, AL 36688, USA)

  • Robert Forrester

    (Department of Finance, Midwestern State University, Wichita Falls, TX 76308, USA)

  • Macy Adams

    (University of South Alabama, Mobile, AL 36688, USA)

Abstract

We investigate the impact of vulnerability and the law of justice indicators on the decision to adopt International Financial Reporting Standards (IFRS) by 133 countries. Applying robust Logit and Probit models to 2021 cross-sectional data, we find that the absence of corruption, state illegitimacy, a well-functioning civil justice system, and insufficient public services are helpful for IFRS adoption. On the other hand, results show that a country’s uneven economic development and human rights violations are detrimental to IFRS adoption. Our research confirms that requiring higher standards for financial and accounting reporting in the media, allocating sufficient budget amounts to support an equitable civil justice system, and coordinating efforts to reduce or eliminate economic inequality may help IFRS adoption. We argue that highlighting the positive benefits of IFRS adoption and the commensurate constructive policy outcomes may add the emphasis needed to convince governmental leaders to move toward IFRS adoption.

Suggested Citation

  • Khandokar Istiak & John Reid Cummings & Robert Forrester & Macy Adams, 2024. "Examining the Impact of Vulnerability and the Law of Justice on the IFRS Adoption Decision," JRFM, MDPI, vol. 17(9), pages 1-16, September.
    • Handle: RePEc:gam:jjrfmx:v:17:y:2024:i:9:p:417-:d:1482240
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    References listed on IDEAS

    as
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    3. Alexios Kythreotis, 2015. "The Interrelation among Faithful Representation (Reliability), Corruption and IFRS Adoption: An Empirical Investigation," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Democritus University of Thrace (DUTH), Kavala Campus, Greece, vol. 8(1), pages 25-50, August.
    4. Hichem Khlif & Kamran Ahmed & Manzurul Alam, 2020. "Accounting Regulations and IFRS Adoption in Francophone North African Countries: The Experience of Algeria, Morocco, and Tunisia," The International Journal of Accounting (TIJA), World Scientific Publishing Co. Pte. Ltd., vol. 55(01), pages 1-36, March.
    5. Charles Amo Yartey, 2008. "The Determinants of Stock Market Development in Emerging Economies: Is South Africa Different?," IMF Working Papers 2008/032, International Monetary Fund.
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