Are crises one of the rationales used by international accounting standards board to gain global dominance?

• Author: Marcus, Cristina M.
• Position: Report

1. INTRODUCTION

   Research studies on the evolution of accounting have a long tradition. Transformations in accounting knowledge and practice have been influenced by many factors, such as economic, social and political pressures, (Tomkins, 1798) ad hoc influences like wars, periods of economic decline and labour disputes (Miller et al., 1991). Also, Hans Hoogervorst, the incoming Chairman of the International Accounting Standard Board, claims that "it is a sad truth that most initiatives to strengthen the international financial architecture to reap the fruits from the on-going liberalization of capital movements have been taken under the pressure of some kind of crisis" (Address to the International Monetary and Financial Committee, 2002: 16). International accounting regulations (IAS and IFRS) is considered part of this international financial architecture, defined as a "set of measures that can help prevent crises and manage them better in the more integrated international financial environment" (World Bank webpage).

   To illustrate such a relationship between the financial crisis and accounting, we build this study that aims to emphasis that crises are one of the factors that bring the National Accounting Regulations, from those countries affected by crises, into line with the International Accounting Regulations. The end of the twentieth century is characterized by depression periods which led to crises in different parts of the world, such as Asian and Scandinavian countries, Mexico, Russia and Argentina. All these crises, together with the US corporate crisis (2001-2002) led to changes in accounting regulations, of the aforementioned countries, bringing them into line with the International Accounting Standards (Bhimani, 2008; Lin, Chen, 2000; Mooskooki, 2002; Rahman, 1998).

2. RESEARCH PURPOSE AND METHODOLOGIES

   The main purpose of this study is to prove that crises, from the end of twentieth century, are one of the rationales used by IASB to gain global dominance, with the International Monetary Fund (IMF) and World Bank (WB) as messengers, particularly with an emphasis on Asian Crisis, that led to changes in the Accounting Regulations, in Asian countries, bringing them into line with the International Accounting Regulations. Below is the hypothesis for this study:

   Hypothesis 1: Crises are one of the rationales used by IASB to gain global dominance, with the International Monetary Fund (IMF) and World Bank (WB) as messengers.

   The method that will be used here will be the explanatory case study because it will enable an analysis of the reasons influencing why accounting regulators modify accounting regulations after crises. There are few articles related to this topic in the literature, however there are several reports prepared by the IMF and World Bank that can be used in order to emphasis the purpose of this study.

   The research method that is going to be used in this research is case studies. Ray et al. (2002: 142) points out that "in accounting research case studies are gaining acceptance as an appropriate research method, and an increasing number are appearing in the research literature". The following paragraphs aims to describe the case studies of this research and also the appropriate research methods that are going to be used.

3. LITERATURE REVIEW

   Reflecting the magnitude of "financial crises" in 2008, some academics started examining causal relationships between accounting, accounting regulations and the crisis. In terms of "accounting crises (or scandals)" and accounting regulations, there has been significant amount of literature, but such literature is yet to be developed to illustrate the relationships between financial crises, accounting and accounting regulations. There is a...