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Does the adoption of IFRS affect corporate social disclosure in annual reports?

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  • van der Laan Smith, Joyce
  • Gouldman, Andrea L.
  • Tondkar, Rasoul H.

Abstract

In this exploratory study we investigate the impact of the implementation of IFRS on corporate social disclosures (CSD) within the context of stakeholder theory. We measure the level of CSD in annual reports using a disclosure instrument based on the United Nations Conference on Trade and Development report “Guidance on Corporate Responsibility Indicators in Annual Reports”. We find that IFRS adoption had a differential effect on CSD based on a firm's institutional setting i.e., the stakeholder–management relationship prevalent in their institutional environment. Firms in the stakeholder countries did not have a significant change in the level of CSD following the mandatory adoption of IFRS while firms from the shareholder countries experienced a significant increase over the same period resulting in shareholder countries providing an overall higher level of CSD after IFRS adoption than stakeholder countries. These findings suggest that firms' reactions to the requirements of IFRS and the stakeholder pressure to provide additional CSD are influenced by institutional environment. Further, our results provide support for the use of stakeholder theory to predict the level of CSD.

Suggested Citation

  • van der Laan Smith, Joyce & Gouldman, Andrea L. & Tondkar, Rasoul H., 2014. "Does the adoption of IFRS affect corporate social disclosure in annual reports?," Advances in accounting, Elsevier, vol. 30(2), pages 402-412.
    • Handle: RePEc:eee:advacc:v:30:y:2014:i:2:p:402-412
    DOI: 10.1016/j.adiac.2014.09.015
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    1. Weerathunga, P.R. & Xiaofang, Chen & Nurunnabi, Mohammad & Kulathunga, K.M.M.C.B. & Swarnapali, R.M.N.C., 2020. "Do the IFRS promote corporate social responsibility reporting? Evidence from IFRS convergence in India," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 40(C).
    2. Arthur Joseph Avwokeni, 2016. "Does IFRS Detract from Social Disclosure in Corporate Annual Report and Accounts? Evidence from Nigeria," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 12(5), pages 82-95, OCTOBER.

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