Microfinance institutions and International Financial Reporting Standards: An exploratory analysis

Isabelle Pignatel and Hubert Tchakoute Tchuigoua

Research in International Business and Finance, 2020, vol. 54, issue C

Abstract: Previous studies analyzing firms’ incentives to choose international accounting standards show that firms with strong contracting incentives will be more likely to comply with International Financial Reporting Standards (IFRS). These studies are mostly centered on developed economies and are based on European and US data. Little is known about development finance organizations’ incentives to choose to draft their financial statements according to IFRS. Because commercialized microfinance institutions (MFIs) have strong contracting incentives, we investigate whether commercialization drives the choice of IFRS and study a pooled international sample of MFIs’ audited financial statements extracted from the MIX from 2007 to 2014. Consistent with our predictions, evidence shows that commercialization and maturity (age) are likely to drive the MFIs’ choice to comply with IFRS. Results are robust after controlling for heterogeneity in national regulations with regard to IFRS.

Keywords: International Financial Reporting Standards (IFRS); Microfinance; Maturity; Commercialization (search for similar items in EconPapers)
JEL-codes: G21 G30 M41 O16 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:54:y:2020:i:c:s0275531920302415

DOI: 10.1016/j.ribaf.2020.101309

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