Stakeholder and jurisdictional influence over IFRS 10's development

Abstract

The International Financial Reporting Standards are voluntarily adopted by 167 countries, including countries in Africa, Australasia, Europe and South America. To maintain its legitimacy, the International Accounting Standards Board (IASB) must not be viewed as being unduly influenced by one group or jurisdiction. If the IASB’s procedural legitimacy is compromised, it threatens their cognitive legitimacy and the global adoption of IFRS.

Currently, most papers investigating the legitimacy of the IASB’s due process employ simplified assessment tools. This paper investigates the relative influence of stakeholders and jurisdictions over the IASB’s standard setting, using the method designed by Bamber and McMeeking (2016). This method does not treat all requests for changes equally, strengthening the validity and quality of the findings. In addition, this paper answers the call from Bamber and McMeeking (2016) to corroborate or refute their findings that not all stakeholders exerted equal influence and that comments from the UK are less influential than those from the US.

Using a content analysis, this paper investigates the relative influence of jurisdictions and stakeholders on IFRS 10’s development. The paper finds that, although no single stakeholder has a much greater influence over the IASB than others, there is some evidence of bias in a jurisdictional space in favour of the US and the UK with regard to the development of IFRS 10.

Keywords:

• IASB
• IFRS 10
• Legitimacy
• Standard-setting
• Content analysis
• Due process

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 There may be instances where a jurisdiction mandates the use of IFRS, making the adoption mandatory. However, relevant jurisdictions have the option to mandate IFRS or not, making it voluntary in that regard.

2 The IFRS Foundation also develops sustainability disclosure standards.