Insights into the IASB due process: the influence of country characteristics on constituents’ formal participation

• Main Authors: Karsten Eisenschmidt, Joanna Krasnodomska
• Format: Article
• Language: English
• Published: Rada Naukowa SKwP 2017-12-01
• Series: Zeszyty Teoretyczne Rachunkowości
• Subjects: due process; standard setting; IFRS; comment letters; cultural characteristics; Hofstede
• Online Access: http://ztr.skwp.pl/gicid/01.3001.0010.6570

The paper explores the impact of country characteristics on constituents’ formal participation in the IASB’s due process. We hypothesize that there is an association between the level of constituents’ partic- ipation and (1) the level of economic development, and (2) the cultural characteristics of the country of origin. We use a number of comment letters (CLs) and their length as proxies for constituents’ formal participation in the IASB’s due process. The results indicate that economic development (equity market capitalization) is the most important explanatory factor for the different levels of participation. In con- trast, the cultural characteristics measured by Hofstede’s cultural framework can only partially explain that differences. Only individualism is a significant positive influence factor for the level of constituents’ participation. The results of our descriptive analysis for the CLs and the information input provided show that there is still a lack of participation in the IASB’s due process. Despite the huge impact of accounting norms on societies, only a limited number of constituents participate, and some constituent groups, like users or academics, participate less.