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INTACCT Research Project Analysis of key national actors’ perceptions in the roll-out of IFRS model by non-listed companies in Portugal. Alexandra FONTES University of Minho and University of Valencia. Varna , 4-5 March 2 010. 1. Motivation.

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INTACCT Research Project Analysis of key national actors’ perceptions in the roll-out of IFRS model by non-listed companies in Portugal

Alexandra FONTES

University of Minho


University of Valencia

Varna, 4-5 March 2010

1 motivation
1. Motivation

EC Regulation 1606/2002 – EU Adoption and use of IFRS

Required: Listed companies financial statements from 2005 onwards

Member State Option: Unlisted Companies

Several approaches adopted by the MS as a response to the EC IFRS Regulation


    • Extension of IFRS adoption: Unlisted companies are permitted to adopt IFRS if their accounts are audited
    • Transposition of the IASB model adopted by the EU to the Portuguese Accounting System – “Accounting Standardization System” (in force since January 2010)
  • However: Main users of financial statements of Portuguese non-listed companies: Tax authorities and Banks

Portuguese non-listed companies may not have incentives to increase financial reporting quality; and its users to support IFRS’ s accounting philosophy

1 motivation1
1. Motivation

Reasons behind Portugal’s decision to extend IFRS model to non-listed companies - Why???

Position of the various interest groups regarding the national accounting reform

Factors associated with interest groups’ support (or not) towards the adoption of IFRS-based accounting system by non-listed companies

Interest groups’ position  the resulting quality of accounting information

INTACCT Varna Workshop

1 motivation2
1. Motivation

Gaps and shortcomings of the existing accounting literature addressing this research topic

Little research analyzing in-depth the views and expectations of the various interest groups regarding the provision of IFRS- based financial reporting

Lack of a comprehensive theoretical underpinning

Methodological approach

INTACCT Varna Workshop

2 research questions
2. Research Questions
  • What are the perceptions of key actors (regulator and professional organizations) regarding the extension of the IFRS accounting underlying principles to non-listed companies in Portugal?
  • What (hindering and promoting) factors are perceived to influence key actors’ attitudes regarding the adoption of IFRS-based standards by non-listed companies?
  • What are the strategies required by the targets of the change, aimed at managing and handling with the potential problems raised by the implementation of the national adoption of IFRS model?
3 relevant literature
3. Relevant Literature
  • IFRS-related research analyzing constituents’ perceptions (e.g.Tyrrall et al. 2007 IJA; Aljifri & Khasharmeh 2006 IBR; McEnroe & Sullivan 2006 JIAAT; Ngangan et al. 2005 AIA)
  • Literature on users and preparers’ perceptions of financial statements (e.g. Son et al. 2006 QRAM ; Ho & Wong 2001 IJDG)
  • Prior research examining perceptions towards change in the field of Information Technology (IT) implementation (e.g. Robey 1979 AMJ; Bailey & Pearson, 1983 MS), management accounting, and organizational change (e.g. Jabbar et al. 2007 MAJ; Anderson et al. 2002 AOS)
  • Change management literature

- Hardy’s (1985 JMS, 1996 BJM) power framework

- Suchman’s (1995 AMR) legitimacy framework

- Actor-Network Theory (Callon 1986; Latour 1999)

  • Institutional Theory (e.g. Carruthers 1995 AOS; Oliver 1991; AMR; DiMaggio & Powell 1983 ASR)
4 research methodology
4. Research Methodology

Grounded theory approach to Qualitative Research (Strauss & Corbin, 1990)

  • Interactive/circular approach of the research process
  • Role of Theory: preliminary assumptions

Central aim

Theory development through the continuous interplay between theory and data


4. Research Methodology

Sampling Rationale

Key Features of Qualitative Sampling (Flick, 2006; Yin, 1994; Miles & Huberman, 1994; Strauss & Corbin, 1990)

  • Theoretical
  • Purposive
  • Flexibility
  • Diversity
4 research methodology1

Interviews with elements of:

The Portuguese accounting standards-setting board and

Professional organizations representing the various interest groups, such as:

the Portuguese Chamber of Certified Public Accountants (Ordem dos Técnicos Oficiais de Contas - OTOC);

the National Chamber of Statutory Auditors (Ordem dos Revisores Oficiais de Contas – ROC)

the Portuguese Association of Financial Analysts (Associação Portuguesa de Analistas Financeiros – APAF)

the Portuguese Tax Association (Associação Fiscal Portuguesa- AFP)


Rationale: Relevance of professional organizations in representing the views of different interest groups; and in mobilizing power to generate commitment towards accounting change (O'Dwyer et al. 2005 AAAJ; Potter 2005 Abacus)

INTACCT Varna Workshop


4. Research Methodology

Data Sources – Interviews and Document Analysis


  • Semi-structured (and theoretical driven) interview guide
    • Enhances comparability and completeness
    • Facilitates data analysis and theory development
  • Use of scales
    • Avoids the potential interviewer bias in the collection and analysis of qualitative data
    • Enhances the credibility of theory building from qualitative data
    • Enables confirmation and corroboration (Validation/confirmation)
    • Searches and offers theoretical explanation of the divergences and contradictions (Validation/divergence)
    • Offerscomplementaryresults
    • Informs future development of measurement scales for survey-based work

4. Research Methodology

Data Sources – Interviews and Document Analysis

Document Analysis

  • Rationale: Enables to corroborate and augment the interview’s evidence

Assists in avoiding the risk of the interviewee bias (i.e. the risk of the interviewee conveys his personal view, rather than the view of the representing organization)

“Overall, interviews are an essential source [the most important] source of case study evidence because case studies are human affairs. These human affairs should be reported and interpreted though the eyes of specific interviewees.....However, the interviews should always be considered verbal reports only. As such they are subject to the common problems of bias, poor recall, and poor or inaccurate articulation. Again, a reasonable approach is to corroborate interview data with information of other sources”

(Yin, 1994:85)

Interview Guide (some ideas)


Which were the motives that led the National regulator to adopt the IFRS principles for non-listed companies?

To which extent the decision could be different in a difficult economic situation, as the one we are living nowadays?

IFRS for SMEs:

Why didn’t you adopt the pure IFRS (namely, the IFRS for SMEs)? [Regulator specific question]

How would you react if the EC pushes to the adoption of IFRS for SMEs?


In your opinion, what are the key benefits of the accounting reform?

Do you think that the adoption of the new accounting system will contribute to improve the quality/usefulness of accounting information at the national level?

4. Research Methodology

INTACCT Varna Workshop

Interview Guide (some ideas)

Problems/Costs: In your opinion, what are the expected problems associated with the adoption of IFRS-type accounting standards at the national level?

IFRS’s in-country adequacy:

Do you consider the IFRS philosophy suitable for the national environment?

Do you think that the current enforcement mechanisms are sufficient to ensure the consistent application of the new accounting system?


In your opinion, which measures/initiatives should be taken to ensure the proper adoption of IFRS model at the national level? Does your organization have any planned measures in this sense? ?

4. Research Methodology

INTACCT Varna Workshop

Interview Guide (some ideas)

Overall Value: Do you consider that the benefits of adopting IFRS-based standards by non-listed companies outweigh the costs/problems of implementation?

Perceived role of the professional organization in the process of accounting change

What was the role of your organization in the process of the accounting reform?

Was there sufficient due process and involvement of all interested parties in the plan of convergence?

4. Research Methodology

INTACCT Varna Workshop


4. Research Methodology

Computer software data analysis (NVIVO 8.0)

  • Facilitates the appliance of the grounded theory analysis procedures
  • Allows flexibility and revision in the data analysis
  • Ensure completeness and refinement
  • Enables the triangulation of quantitative and qualitative data

4. Research Methodology

Qualitative Research Protocol

  • Interview recordings and transcriptions
  • Send a brief summary of the interview guide in advance to the organizations (c.f. O’ Dwyer, 2005)
  • Interview more than one individual from each organization (c.f. Flick, 2006)
  • Member-checks
  • Triangulation of data type and data sources
  • Maintaining a chain of evidence
6 concluding remarks
6. Concluding Remarks

Expected Contributions

  • Theoretical contributions: Development a comprehensive theoretical framework to access the receptivity of the various interest groups towards the adoption of IFRS GAAP at the national level

Such theoretical contribution might assist other researchers to develop comparative surveys (such as, longitudinal surveys and comparisons surveys of several countries).

  • Practical implications for the IASB and for national accounting standard-setters, as it is expected to provide important insights for debates about the relevance of IFRS for different interest groups.