Vietnam. Institutional theory and accounting change: An analyze of accounting regulations in Vietnam

Abstract

This paper’s aim is to explore how institutional pressure exerted on regulators influenced the their decision to adapting a capitalist accounting system in the national accounting during Vietnam’s reforms and integration process into the global economy. Based on the institutional theory, the paper shows that in the first phase Vietnam adapted the former socialist accounting system, moving towards a private capitalist accounting model but preserving many fundamental peculiarities of the accounting system under a centrally planned economy. In the second phase, facing situations where there are uncertainties about the proper approach to set accounting standards, regulators have sought standards of the IASB that are viewed as being more legitimate and "mimic", regardless of their actual usefulness in Vietnam’s context. As a result, besides potential benefits, the Vietnamese accounting standards are less efficient for the domestic enterprises. Instead of applying the accounting standards, the domestic enterprises prefer to continue to use the Uniform Accounting System to prepare the financial statements. Those problems suggest that accounting regulators in transitional and developing countries may face issues similar to those in Vietnam.