Does Uniformity Engender Conformity? An Analysis of International Accounting Standard Adoption

The International Accounting Standards Committee (IASC) was organized in 1973 with the primary goal of harmonizing international accounting standards. In 1988, the IASC conducted a survey to determine the extent of conformity of national accounting standards and practices to IASC standards. While prior research has attempted to group countries into clusters based on conformity with IASC standards, little is known about the determinants of conformity. IASC standards vary both in the degree of flexibility they permit in reporting as well as in the type of provision covered by the standard. We use ordinal logistic regression analysis to examine the effect of extent of uniformity and topic of provisions contained in a particular IASC standard on conformity scores for that standard. The extent of national standard setters' adoption of IASC standards is negatively related to the extent of uniformity mandated by a standard and also to disclosure mandates. Mandates for absolute uniformity in disclosure are most strongly associated with lower conformity while flexibility in accounting principles provisions is most strongly associated with higher conformity. In the aggregate the data are consistent with the view that the nature of the standards provisions significantly influence the extent of conformity with IASC standards.