Compliance with Accounting Standards by Jordanian SMEs

Abbas Saad Hamada Alkhuzaie, Muzaffar Asad, Ala'a Zuhair Ahmad Mansour, Mohammed Ali Bait Ali Sulaiman, Umar Nawaz Kayani and Muhammad Uzair Asif

Economic Studies journal, 2024, issue 1, 89-107

Abstract: SMEs are renowned all over the world for being informal, therefore, following accounting standards, is something unique for SMEs. Jordan being the heaven for SMEs is becoming more and more formal for SMEs, yet the government has not imposed any restrictions on SMEs to follow accounting standards. However, several SMEs in Jordan are following accounting standards because of the advantages that SMEs can avail by adopting accounting standards. Hence, it is vital to understand the factors which influence the adoption of accounting standards, as well as it is equally important to understand the advantages which SMEs can gain by adopting accounting standards. Thus, this study has two core aims, initially to identify the factors which influence the implementation of accounting standards and secondly the identification of the significant advantages which SMEs can achieve by the implementation of the same. For conducting the analysis the data has been collected from 100 SMEs operating in Jordan. Purposefully those SMEs were chosen with the help of a filter question that were adopting accounting standards. For evaluating the hypothesis, structural equation modelling has been applied. The results revealed that the adoption of accounting standards have benefits for the SMEs, whereas only demand for quality reporting and financial information external users have shown insignificant impact over usage of accounting standards, perhaps since it is not mandatory by the government. The study also opened horizons for future research, because there is yet a lot that need to be explored that why SMEs are reluctant in adopting accounting standards or what are the major hurdles in the adoption of financial accounting standards.

JEL-codes: G10 G19 (search for similar items in EconPapers)
Date: 2024
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