The Transition To IPSAS Standards: The Extent of Adoption and The Influence of Institutional, Contingency and Economic Network Factors

Research Question: the study identifies the reasons behind the country choice between different IPSAS adoption approaches. Motivation: Our motivation is guided by the growing interest in financial reporting for the public sector. In this sense, this study is distinguished from the former articles by increasing the extent of adoption into four categories instead of dividing it into two classes (adopters vs. non-adopters). Besides, this paper differs from previous studies by relying jointly on not only the institutional and the contingency but also the economic network factors to explain countries' decision to adopt IPSAS. Idea: In this paper, we deal with two objectives. Our first aim is to propose a new measure of the extent of the adoption of International Public Sector Accounting Standards (IPSAS). On the other hand, our second aim is to identify the factors influencing the IPSAS adoption decision. Data: Different sources are used: the IFAC's websites, the ACCA's website, the big audit firms websites, international banks and countries Ministries of Finance websites. Tools: Fifteen explanatory variables were retained to explain the variation in the extent of IPSAS adoption of 84 countries. Principal Component Analysis (PCA) is adopted to summarize the huge quantity of information presented in the explanatory variables. Then, a multinomial logistic regression is used to test our hypotheses. Findings: Our main results show that coercive and mimetic institutional pressures positively affect the adoption of cash-basis IPSAS. Whereas, the good economic governance has a significantly impact on the full accrual-basis IPSAS adoption. The close of economic relationships with international partners pushes countries to adopt modified accrual-basis IPSAS. Contribution: These findings help non-adopting countries that intend to move in the IPSAS direction to predict the form of their future adoption.