Corporate Characteristics Motivating Standardization: The Case of Accounting Convergence in European Union

To identify how corporate characteristics impact the decision to converge, we tested three groups of European firms assigned into a group by the time of the IFRS adoption. Following the theory on network externalities, we hypothesize that companies with more business complexity and higher value benefit from a positive network effect and therefore, represent a driving force in accounting standardization. We provide evidence, that a firm’s business complexity and valuation characteristics have a significant impact on IFRS adoption. We also document that the extenuating effects of jurisdictions and national levels of bureaucratic formalities in business are factors that affect firms’ IFRS adoption decisions