Investigating the Impact of Adoption of International Financial Reporting Standards on Governance Indicators (Control of Corruption and Responsiveness): A Cross Country Study

The purpose of this research is to investigate the effect of the adoption of international financial reporting standards on governance indicators. Accounting increases accountability and reduces corruption by reducing information asymmetry between managers and stakeholders, as well as by increasing transparency.

For this purpose, 74 countries have been selected from 2004 to 2021 and the research hypothesis has been studied using regression coefficients analysis. Based on the theoretical literature, the value of one for countries that have accepted international financial reporting standards and zero for one and for the other countries, as well as for measuring governance indicators, World Bank metrics including accountability and corruption control have been used.

The research results show that there is a significant relationship between the acceptance of indicating that international financial reporting standards and accountability as well as corruption control. In other words, with the adoption of international financial reporting standards, corruption control and accountability will increase.

With the acceptance of international financial reporting standards, financial transparency increases, and subsequently accountability and corruption control are affected. By reducing information asymmetry and increasing transparency, the adoption of IFRS prevents the risk of moral hazards and also prevents the concealment of the unpleasant operation.

Contribution: 

The results of this research are useful for enriching the literature in this field of research and will specifically help with the role of accepting international financial reporting standards and responding to the existing literature.