The role of institutions in the process of global convergence to IFRS

This paper uses some major contributions from accounting institutional theory to discuss the process of convergence toward IFRS. The theory of isomorphism and the New Institutional Accounting framework, together with a review of historical events and empirical research, are used to examine the institutions that have played a major role in the different phases of this process. In this way, we identify the different roles of some main institutions, showing how they have positively or negatively influenced the process of convergence, grouping them into three categories and highlighting their main interactions in different contexts. We place global and international institutions such as IOSCO, EU and other international agencies such as the World Bank into the first category, since they have fostered the initial phase of the convergence process. Secondly, we find that the presence of institutions such as local government and standard setters, which play an intermediary role, mediates between the need to guarantee the implementation of the standards and the need to preserve pre- existing equilibria. Finally, we discuss the role played by the end-users of the standards. Our analysis shows that these institutions are the most critical forces. In fact, in the absence of a structured, led program that orients these forces toward IFRS, the convergence process could result in the proliferation of local systems of standards, increasing the risk that harmonisation is achieved only in name.