Transitioning to an IFRS-Based Accounting System: Longitudinal Insights from Practitioners in Portugal

Abstract

This paper explores the extent to which International Financial Reporting Standards (IFRS)-wide support (regardless of the institutional context) is warranted. Drawing from an institutional theory framework, it investigates the extent to which practitioners in a code-law-rooted country perceive the materialization of claimed benefits of IFRS and the institutional forces that may hinder the IFRS’s institutionalization process. An interpretative approach based on qualitative research was adopted. Longitudinal evidence was gathered from 34 in-depth semi-structured in-person interviews with Portuguese preparers conducted in 2009 (just before an IFRS-based accounting system was adopted) and 2017 (at a post-implementation mature stage). Qualitative data analysis was carried out using a thematic coding scheme derived from the adopted theoretical framework: legitimacy and economic (operational and financial) benefits and institutional contradictions (IFRS’s in-country adequacy). The main results highlight that, while legitimacy benefits have been broadly recognized, economic benefits were scantly perceived due to the enduring code-law institutional logic embedded in the Portuguese context. Consistently, a high possibility of decoupling and manipulating accounts was acknowledged, which in turn casts reservations not only about the material consequences of the international convergence process to IFRS but also about its contribution towards sustainable development. Given that a major academic debate persists on whether accounting harmonization is beneficial, this research’s findings fill this gap and provide valuable insights for future research, practice, and regulation. Particularly, our findings enhance the urgency of developing institutional adjustments, such as changing national culture, on behalf of the Anglo-Saxon-based institutional approach of IFRS.