THEORETICAL FRAMEWORK OF FINANCIAL REPORTING WITH IFRS

It is apparent that there are differences between countries in their IFRS adoption processes and improvement in the quality of their financial reports after IFRS adoption. So, beside the accounting standards all the other factors affecting accounting quality, such as legal and political systems, cultural values, tax practices, financial reporting incentives, should also be considered in the assessment of IFRS adoption. In this context, in order to comprehend the role of the institutional factors in the global diffusion of IFRS, IFRS adoption is reviewed through different theoretical frameworks such as agents and institutional theories. This theoretical review which is corroborated with the findings of relevant literature review suggests that legitimization pressures have a more active role than economic reasons in the IFRS adoption process