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Artikel 1A - Ghio Verona (2018) Accounting Practitioners Attitudes
Artikel 1A - Ghio Verona (2018) Accounting Practitioners Attitudes
Roberto Verona
University of Pisa
ABSTRACT: This paper explores the logics that drive the attitudes of certified accounting practitioners for small firms
(CAs) toward new accounting standards. It then unravels the heterogeneity within the accounting profession
surrounding the accounting harmonization process. Through analysis of an extensive survey of 1,268 Italian CAs and
of ten interviews with presidents of local professional associations regarding an ongoing accounting harmonization
project (i.e., the IFRS for SMEs), we first document the coexistence of competitive logics in driving CAs’ attitudes
toward the new accounting standards. Second, we demonstrate the role of social characteristics in fragmenting the
community of accounting professionals, particularly in expressing heterogeneous views on the IFRS for SMEs. This
paper contributes to the literature on the relation between the accounting profession and accounting harmonization
by illustrating the multifaceted attitudes of CAs toward a project of accounting harmonization. The results are also
informative to policy makers in understanding the adoption and implementation process of new accounting
standards.
Keywords: accounting profession; accounting harmonization; IFRS for SMEs; institutional logics.
I. INTRODUCTION
I’ve applied the IAS/IFRS only once in my career. And it was really hard to understand and, later on, to apply all the
requirements of the international accounting standards . . . We really need to understand whether this accounting
project [the IFRS for SMEs] fits with the duties of our profession. (Interview C2, President of a local Certified
Accountants’ association)
T
he accounting harmonization process follows the global demand for greater comparability and transparency (Ball
2006). The propensity to enforce similar principles, mainly based on an Anglo-Saxon framework, necessarily implies
common practice. From a theoretical perspective, the legitimization of new accounting standards and related
implementation costs reflect the involvement of the different stakeholders (Jorissen, Lybaert, Orens, and Van der Tas 2013).
Although prior literature provides empirical evidence of accounting harmonization in large firms (e.g., Barth, Landsman, and
Lang 2008; Daske, Hail, Leuz, and Verdi 2008; and Armstrong, Barth, Jagolinzer, and Riedl 2010), there has been little
research on SMEs (Gassen 2017; Ram and Newberry 2017). This dearth of information is particularly relevant due to the
growing attention of investors and regulators toward SMEs’ financial reporting and their role in the economy.
In this paper, we empirically examine the attitudes of Italian certified accounting practitioners for small firms (hereafter,
CAs)1 toward the IFRS for SMEs. SMEs often rely on professionals to prepare their financial reporting and to make accounting
We thank Stefano Coronella, Luca Del Bene, Aldonio Ferreira, Giuseppe Iannello, Christo Karuna, Robert Melville, Robyn Moroney, Richard Pucci,
Carlos Ramirez, and Gianluca Risaliti for their helpful comments on earlier versions of this paper. We are grateful for the comments made at the 2014
CAAA Annual Conference (discussant Matt Wegener), the 2014 AFC Conference (discussant Véronique Blum), at the workshop at the University of Pisa
in March 2014, and at the 2017 JIAR Conference (discussant Paul Coram). The authors thank Giovanni Riccardi for providing excellent research
assistance.
Editor’s Note: Accepted by Joanna L. Ho, under the Senior Editorship of Ervin L. Black.
Submitted: January 2017
Accepted: September 2018
Published Online: September 2018
1
The Italian equivalent is ‘‘Dottori Commercialisti.’’
103
104 Ghio and Verona
and auditing choices (Deegan 2013). SMEs cannot afford the services of the Big N, who habitually play a key role in shaping
standard-setters’ decisions. Prior studies argue that the standard-setting process of the IFRS for SMEs, a set of simplified IAS/
IFRS issued by the IASB in 2009, did not fully involve the CAs (Di Pietra et al. 2008; Quagli and Paoloni 2012) despite the
fact that they will be significantly impacted by the adoption and implementation of the new standards. The potential distortions,
due to the partial representation of constituents and understanding of their needs, may impair the subsequent implementation of
the new standards (Jorissen et al. 2013; Morley 2016). This scenario raises important red flags that need to be addressed in the
pre-implementation phase. Specifically, CAs assume a position on new standards depending on their driving values. In this
paper, we therefore explore (1) CAs’ attitude toward the IFRS for SMEs and (2) whether CAs hold homogeneous positions
within the accounting profession.
We focus on the IFRS for SMEs because they represent a first major attempt of accounting harmonization for SMEs. On
the one hand, they are expected to facilitate competitiveness and access to financing for SMEs. CAs would provide their
expertise in implementing the technicalities of the new standards and to proficiently exploit the potential benefits of the IFRS
for SMEs. The higher comparability could improve SMEs visibility, attract new foreign investors, develop business
opportunities, and finally, open the door to new consulting services for CAs.
On the other hand, the transition to the IFRS for SMEs represents a costly process. SMEs may find difficulties in
understanding the benefits of these new standards given their reduced business complexity, problem of generally low
stewardship, and responsibility toward only a few stakeholders. Moreover, the CAs would have to face a cultural transition
from the Continental system of the Italian GAAP to the Anglo-Saxon-based conceptual framework of the IFRS for SMEs.
Finally, the IFRS for SMEs would require new training and education because they represent a completely new set of rules.
The features of our setting allow us to explore the attitudes toward the IFRS for SMEs both within an evolving accounting
profession and in a Continental-based accounting culture. Italian CAs provide the accounting expertise often lacking in Italian
SMEs, which represent 99.9 percent of the total number of Italian enterprises (European Commission 2012). They usually
prepare the financial reporting for SMEs, provide tax advice, fulfill many of the administrative burdens required by law, and
can also independently audit financial statements. More recently, they have increasingly expanded into consulting services,
particularly in the areas of M&A, foreign development, business plans, and access to European funds.
Italian CAs most often deal with the Italian GAAP. Only listed companies adopt the IAS/IFRS in their financial statements
and they mainly rely on the Big 4 services. Italian accounting standards are oriented toward protecting creditors rather than
investors. They place emphasis on principles such as prudence and historical cost rather than valuing relevant and forward-
looking information, and encourage a conservative valuation of assets (Lacchini and Trequattrini 2002). This approach reflects
the underlying economic system. Italian SMEs are mainly financed by banks rather than by equity on the stock exchange and
are often family-owned (Cascino, Pugliese, Mussolino, and Sansone 2010). Moreover, the regulation system is based on
Roman law, whereby written rules prevail over customs and usage, while accounting standards are of secondary importance
compared to the civil code. Italian CAs, without having significantly contributed to the definition of the IFRS for SMEs, would
constantly have to manage this new set of accounting standards. The analysis of Italian CAs’ attitudes toward this new project
therefore allows us to map the elements that determine Italian CAs’ decisions in their professional activities during the
implementation process.
In order to have a comprehensive vision of the links between macro structural perspectives, i.e., adoption of the IFRS for
SMEs, and micro processes, i.e., implementation of the IFRS for SMEs, we mobilize the institutional logics perspective,
defined as ‘‘the socially constructed, historical patterns of material practices, assumptions, values, beliefs, and rules by which
individuals produce and reproduce their material subsistence, organize time and space, and provide meaning to their social
reality’’ (Thornton and Ocasio 2008). Through institutional logics, we can draw the guidelines to the orientation on an
institutional change, i.e., the adoption of a new accounting standard of an organization or of a group (Lounsbury 2008;
Rautiainen, Urquı́a-Grande, and Muñoz-Colomina 2015; Hyvönen, Järvinen, Pellinen, and Rahko 2009). Our decision to focus
on an early stage of the implementation of new accounting standards aims at observing how actors respond and make sense of
new global accounting standards, considering that institutional practices are both path dependent (North 1990) and sedimented
(Cooper, Hinings, Greenwood, and Brown 1996).
Building upon prior studies on institutional complexity (Greenwood, Raynard, Kodeih, Micelotta, and Lounsbury 2011;
Scott 2013), we argue that accounting harmonization represents a process that engenders institutional complexity. Numerous
logics would therefore shape CAs’ decision-making process during implementation. Through the analysis of the logics drawn
upon by CAs, it is possible to identify the different attitudes toward the adoption of the accounting standards.
First, we explore the logics that drive CAs, in order to identify the rationales governing their choices during the
implementation process. For a long time, CAs have been considered as technical experts responsible for complying with the
accounting standards (Anderson-Gough, Grey, and Robson 2001), causing their activities to be associated with the professional
logics. More recently, however, CAs are increasingly providing consulting services to their clients, especially to SMEs (Carter
and Spence 2014), which suggests that the commercial aspects of their work are associated with a market logic perspective.
Additionally, we highlight the relevance of the cultural logic due to the peculiarities of the Italian accounting culture and of the
business environment. Given that the three logics are expected to define the profession, we posit that they independently
contribute to Italian CAs’ willingness to recommend the IFRS for SMEs to their clients.
Second, this study investigates whether segments of CAs, differentiated by social characteristics, have homogeneous views
on the three logics. On the one hand, it is possible to precisely define the boundaries of the accounting profession according to
the mandatory national qualification required to practice the activity. On the other hand, the accounting profession is usually
perceived as ‘‘permeable and plastic’’ to changes (Carnegie and Napier 2010; Greenwood, Suddaby, and Hinings 2002). CAs
exhibit diverse opinions and ideas (Ramirez 2013, 2009; Annisette and Trivedi 2013). We focus on social characteristics that
prior literature identifies as relevant to Italian CAs (Coronella 2010; Amaduzzi 2004), such as field of expertise (i.e., tax and
audit), seniority, level of education, and professional training. Considering institutional complexity related to the IFRS for
SMEs, we investigate whether the relevance of the different logics varies across segments of CAs.
Through the quantitative analysis of a survey of 1,268 Italian CAs, we map the attitude of CAs toward the IFRS for SMEs.
We deliberately exclude from this analysis the Big 4, so as to have better comprehension of players that are not always directly
involved in the consultation process of the IASB and because the Big 4 rarely provide services to SMEs. We corroborate our
evidence with ten interviews with presidents of local CAs’ associations.
Turning to our empirical results, we first find that the three logics (professional, market, and cultural) independently impact
CAs’ attitudes toward the IFRS for SMEs. These results suggest that different competitive logics coexist and define the
profession. CAs respond to the institutional complexity engendered by the accounting harmonization by operating within a
system of competing logics. The professional logic remains a driver for CAs. At the same time, CAs exhibit a strong interest in
more commercial-related aspects of the new standards and in the cultural framework behind them.
Second, we show that social characteristics influence the relevance of the logics within the Italian accounting profession.
We empirically document the presence of segments of CAs, highlighting the presence of competitive interests and values.
Expertise in tax or audit are mainly associated with the professional and market logics, whereas the level of education
influences the relevance of the cultural logics. This multifaceted situation could potentially impair the adoption and
implementation of new accounting standards.
Our study makes several contributions. First, it adds to the literature on accounting harmonization by providing a first
attempt at assessing the impact of the international accounting standards on SMEs. We provide evidence that multiple logics
independently drive CAs’ attitudes toward the IFRS for SMEs and that these logics are likely to influence the implementation
process. Second, we contribute to the accounting profession literature by documenting the role of social characteristics in
defining segments of CAs. We address the call for research by Ramirez, Stringfellow, and Maclean (2015) by providing
empirical evidence on the existence and identification of different segments within CAs. By focusing on individual CAs, our
findings underline the limits of the current homogeneous representation based on the analysis of the logics of the accounting
profession from the organizations’ perspective (for example, Ramirez 2013). Finally, we contribute to understanding the Italian
accounting profession of today. Our findings portray a fragmented community characterized by multiple logics driving CAs’
orientation on the adoption of IFRS for SMEs.
These findings are also informative to policy makers analyzing the convergence process and to SMEs who plan to adopt
these standards to disclose additional financial information. The IFRS for SMEs represent a further step undertaken by the
IASB toward the accomplishment of accounting standardization at a global level. Considering that accounting standards are not
acontextual techniques, but are socially constructed (Burchell, Clubb, and Hopwood 1985) and that the IASB views the IFRS
as designed for the rational, hypothetical situation of decision-making (Young 2006), this study demonstrates the presence of
different logics in the case of accounting for SMEs. It points to their potential relevance in standard-setting, IFRS adoption, and
implementation scenarios. So far, there has been a dearth of information about small accounting practice since it has often been
considered of second-order importance, while lobbying in favor of a harmonization process in this regard is rare due to a lack of
resources. This can have consequences on the implementation of new accounting standards, leading to patchy results.
Finally, by analyzing the Italian accounting profession, we provide additional evidence on the Continental European
context. Despite the global activities of the IASB, there has been limited research on non-Anglo Saxon contexts (Jorissen et al.
2013; Hope, Jin, and Kang 2006). The relation between CAs and accounting standards represents a great concern for several
countries. For instance, nine out of ten accounting and audit firms are considered small in the U.K. (Key Note LTD 2015). In a
similar fashion, France has a long tradition of small sized accounting firms, which provide their services mainly to small and
medium enterprises (Ramirez 2001). Moreover, the Green Paper ‘‘Building a Capital Markets Union’’ (CMU) from the
European Commission (2015) explicitly seeks simplified, common and high-quality accounting standards for SMEs, since
reporting quality is considered a key element in the improvement and growth processes of these companies in the capital
market. Overall, to the best of our knowledge, this is the first study that broadly assesses CAs’ attitudes toward a project of
accounting harmonization for SMEs in a developed country, i.e., Italy, and that investigates the elements that determine the
perception of these standards.
The rest of the paper is organized as follows. Section II discusses our theoretical framework. Section III describes the
enquiry methodology followed. Section IV discusses the results. In the last section, we discuss our concluding remarks.
civil code for their daily activities. These rules are based on the Continental culture, resulting in a set of precise rules rather than
general principles (Carmona and Trombetta 2008). CAs’ exposure to the IAS/IFRS, based on the Anglo-Saxon accounting
culture, has been limited since Italy has adopted the IAS/IFRS mainly for listed companies. In the present analysis, based on the
Italian scenario, this issue has evident practical implications, especially concerning the knowledge and expertise of Italian CAs.
It is difficult to assess a priori the level of relevance that CAs afford to the accounting culture in which they are grounded when
they make their orientation on accounting standards (cultural logic).
To exemplify how accounting standards would be translated into accounting practices, we first focus on the calculative
practices around the delimitation of the impairment value (Huikku, Mouritsen, and Silvola 2017). In the choice of the WACC
and pre-tax discount rate for each cash generating unit, the professional logic is consistent with the idea that CAs place greater
emphasis on the principle of reliability (Power 2010), where market logic would lead toward a relevance-based approach
(Power 2010), and the Italian cultural logic is closer to the notion of prudence (Alexander and Servalli 2011). These potentially
different approaches would in turn influence when the impairment is reported. Another example is how CAs would present the
new standards to their clients. In the professional logic context, CAs would emphasize the technical advantages of the new
standards to their clients, such as ease of, and lower costs of, consolidating accounts, higher support for the internal decision
process, and financial reporting comparability (Guerreiro, Rodrigues, and Craig 2012; Lander et al. 2013). Concerning the
market logic, CAs would tend to highlight the commercial opportunities to their clients that the IFRS for SMEs may open, such
as attraction of new investors, M&A, or new external financing. The cultural logic would lead CAs to emphasize key aspects
associated with the conceptual framework of the new standards, such as transparency and fewer private benefits of control
(Guerreiro et al. 2012). Finally, professional training, a critical factor in performing high-quality auditing and accounting (Bills,
Hayne, and Stein 2018), would reflect those aspects CAs tend to emphasize to their clients.
A Community of Segments
The formal boundaries of the accounting profession can be easily identified as it is necessary to meet training and
educational requirements in order to qualify as a Certified Accountant (‘‘closure system’’). At the same time, to define a
category we need to understand and highlight its boundaries as well as its content. Identifying the profession as a ‘‘black box’’
may justify the homogeneous representation of the category since the absence of heterogeneity would lead to disguising its
intrinsic complexity. Differently, an in-depth analysis can actually highlight the relevant differences within it (Power 1997;
Annisette and Trivedi 2013; Dambrin and Lambert 2008; Ramirez 2013). Ramirez et al. (2015) call for a reinvigoration of the
research on CAs since they support the idea that a profession ‘‘is not a relatively cohesive or homogeneous entity, but rather an
institutionalized compromise around which several ‘segments’ revolve.’’ The authors, in their research agenda on CAs, adopt
the concept of ‘‘segments in movement’’ to discuss the heterogeneous situation within the accounting profession.
So far, most prior studies have considered logics as holistic, embedded within the profession (Goodrick and Reay 2011).
That is why in order to understand whether CAs have homogeneous views on the three logics examined, we look at the
differences between professionals, disentangling the various social characteristics.
We identify the relevant social characteristics according to our knowledge of the institutional setting and prior research
(Coronella 2010; Ramirez 2009; Serra 1999; Melis 1950). As previously discussed, Italian CAs can perform different types of
activities besides providing accounting services. Professionals’ specialization in certain areas may lead CAs to undertake
specific tactics to reinforce their relative position compared to other segments (Ramirez et al. 2015; Bucher and Strauss 1961).
We investigate the presence of the two most diffuse subspecialties, i.e., audit and tax. For instance, there even exists a sub-
section of the local CAs’ associations restricted to active auditors. Moreover, due to the complexity of the Italian regulatory
system, CAs specialize within tax services. Income tax is determined by ad hoc rules that rely on accounting standards, but
present different specificities.
We then look at the presence of different clusters with regards to educational preparation and training for the profession,
specifically by focusing on the level of education and knowledge of the accounting standards. Finally, we investigate the
differences across levels of experience. Junior/trainee CAs are still mainly involved in technical issues and embody strong
moral and ethical values, whereas more experienced CAs clearly show a business attitude/entrepreneurial approach. Technical
skills, even if excellent, are no longer sufficient in order to be considered as a partner (Carter and Spence 2014).
By segmenting the profession, we aim to understand how segments of CAs respond to institutional complexity due to new
accounting standards. Thus, we test the relation between the CAs’ characteristics and the different logics affecting the
orientation toward the new accounting standards (professional, market, and cultural). We acknowledge that the multi-faceted
accounting profession could lead to identifying additional second-order social characteristics. However, our intention is not to
map all possible segments, but to provide empirical evidence regarding the existence of different, even divergent positions
within the profession concerning new accounting standards. We do not affirm that these segments are fixed, since the dynamic
nature of the segments has been well established (Ramirez et al. 2015). Our theoretical development is summarized in Figure 1.
FIGURE 1
Theoretical Framework
Questionnaire
Given the explorative nature of our research and our objective being to analyze the logics driving Italian CAs toward the
IFRS for SMEs, we employed the use of a questionnaire. As reported by Graham, Harvey, and Rajgopal (2005) and
Bloomfield, Nelson, and Soltes (2016), through the use of questionnaires, researchers can provide new explanations that had
not been previously considered. The questions were developed from the most relevant studies in the literature (Uyar and
Güngörmüs 2013; Quagli and Paoloni 2012; Eierle and Haller 2009; Litjens, Bissessur, Langendijk, and Vergoossen 2012;
Madsen 2011).
The preliminary phase was divided into two parts. In the first, six people with different backgrounds and ages checked the
questionnaire and sent open commentaries about the survey. In the second, we tested the questions through the assessment of
18 selected CAs. We analyzed the answers and the suggestions provided and from this first evidence, we refined the research
questions, the structure of the survey, and the individual questions.
We then divided the Italian local CAs’ associations into five macro territorial areas (North-West, North-East, Center,
South, and Islands), and then randomly selected ten local associations according to the number of members.2 The survey was
sent together with an accompanying letter to 8,550 CAs who were asked to fill it in anonymously from June to July 2013. A
request to participate in the survey was sent by the local association and was signed by one of the researchers involved. The
email informed the CAs of the aim and the topic of the survey, the estimated time for completion, a hyperlink to the online
survey, and a statement of confidentiality. Two reminders were sent 7 and 20 days after the first email. The questionnaire
mainly gathered data on the respondents’ education, job, experience, knowledge of accounting standards, as well as attitudes
toward the technical features, toward the economic and financial benefits of the IFRS for SMEs, and toward the theoretical
framework of the international standards and the reasons to adopt the new standards. We randomized the order of the possible
responses to avoid response order effect. We used a seven-point Likert scale, rating, yes-no questions, single or multiple choice
questions, and semi-open and open questions, since the complexity of the context under analysis requires the adoption of
2
Italian CAs are members (113,235 in the year 2013) of the national CAs’ association (Consiglio Nazionale dei Dottori Commercialisti e degli Esperti
Contabili ), which is composed of 143 local associations.
different lenses in order to gather sufficient appropriate evidence. The questionnaire is divided into four parts: SMEs and
financial disclosure, IAS/IFRS and IFRS for SMEs, education and training, and general information.
The response rate was similar among the ten provinces, except in two cases where participation was lower.3 The total
number of respondents was 1,268, with a response rate of 14.83 percent, in line with past studies using questionnaires (Graham
et al. 2005; Brav, Graham, Harvey, and Michaely 2005). We assessed the validity of the survey by comparing the age of the
population and of the sample. There was no significant difference between the two groups. We also found no evidence of
difference among early and late respondents, either for age or experience level (untabulated results). The open question on the
quality of the questionnaire revealed a positive attitude on the part of respondents toward the survey and a general interest
toward the topics under analysis.
Variables Measurement
Following our theoretical development, we analyze the different logics that determine the attitude of CAs toward the IFRS
for SMEs. Specifically, we assess the relevance of the professional, market, and cultural logics. In Appendix A we report the
questions used to measure the variables.
The dependent variable is the overall attitude toward the IFRS for SMEs. Our measure comes from the willingness of the
CAs to suggest adoption of the IFRS for SMEs to their clients in a scenario of voluntary adoption (Section (d) of Appendix A).
According to the behavioral literature (Buttle 1998), referring/advising an action to a close actor indicates a strong endorsement
of the action itself.
Our independent variables measure the impact of the logics on the CAs attitude toward the IFRS for SMEs. To identify the
professional (PROFESSIONAL) and the market (MARKET) logics, we use a factor analysis. The input variables are the answers
concerning the relevance of the characteristics related to the professional expertise, in particular regarding the technical aspects
of the standards (Section (a) of Appendix A), and the relevance of the commercial characteristics, which mainly refer to
financial and economic strategic aspects (Section (b) of Appendix A). Given that these two constructs are based on multiple
questions, we find that one value can explain more than 50 percent of the total variance for each variable of interest.4
We retained factors with an eigenvalue greater than 3 (Appendix B). Our decision is also supported by the scree plot where
we report the eigenvalue (y-axis) on the number of factors (x-axis). After the first factor, the slope of the curve levels off
(‘‘elbow point’’).5 Finally, we construct our variable CULTURAL by considering the relevance assigned to the theoretical
framework of IFRS for SMEs (Section (c) of Appendix A).6 The definitions of the variables are reported in Appendix C.
Next, we study the role of social characteristics. We focus on those characteristics that identify CAs’ side-activity as
auditors (AUD), their level of education (EDUC), their perceived relevance of tax rules (TAX), and their level of preparation
(Prep_IFRSforSMEs) (Sections (e)–(h) of Appendix A). We control for the level of experience (EXPER) of the CAs (Section
(i ) of Appendix A). Self-assessment has been used to determine CAs’ level of knowledge of the new accounting standards.
Multivariate Analysis
We first examine the impact of the different logics on the overall CAs’ attitudes toward the proposed accounting standards
for small and medium firms. To test for the association between PROFESSIONAL, MARKET, and CULTURAL logics and the
acceptance of the IFRS for SMEs, we develop the following logistic regression (all the variable definitions are summarized in
Appendix C):
IFRSforSMEs ¼ b0 þ b1 PROFESSIONAL þ b2 MARKET þ b3 CULTURAL þ b4 AUD þ b5 EDUC þ b6 TAX
þ b7 Prep IFRSforSMEs þ b8 EXPER þ Area Fixed Effect þ e ð1Þ
3
The response rates were 8.27 percent (128 respondents) for Genova (in the ‘‘North-East’’ Area) and 7.24 percent (64 respondents) for Cosenza (in the
‘‘South’’ Area).
4
As a robustness test, we use the principal component analysis (PCA) to aggregate information relative to the variables PROFESSIONAL and MARKET.
We find virtually identical findings.
5
We performed numerous tests to confirm the validity and reliability of the measures adopted. Our measure of sampling adequacy (Keiser Meyer Olkin
test) was above 0.5. We, therefore, performed Bartlett’s test. We reject the null hypothesis of no correlation among items (p-value , 0.05). These results
hold for both the variables PROFESSIONAL and MARKET. The associated Cronbach’s Alphas range between 0.89 and 0.94, significantly above the
cutoff of 0.80, which indicates high internal consistency.
6
We further validate our theoretical constructs (PROFESSIONAL, MARKET, and CULTURAL) by performing a factor analysis of all items together.
Consistent with our expectations, we find that the three retained components exhibit high loadings for the items associated with PROFESSIONAL,
MARKET, and CULTURAL, respectively. In addition, when deleting items 3, 5, 7, and 8 of Section (a) and item 3 of Section (b), all factor loadings are
above the critical value of 0.32 for samples above 350 observations (Stevens 2012; Field 2013).
We control for individual CAs’ characteristics that may influence the orientation on the IFRS for SMEs, i.e., audit
activities (AUD), education (EDU), tax interests (TAX), and level of training (Prep_IFRSforSMEs) and experience in the
accounting profession (EXPER). We also control for Area Fixed Effects to capture unobserved heterogeneity in area (North-
West, North-East, Center, South, and Islands) characteristics of the respondents. Standard errors are clustered at the
respondent level.
In Equation (1), we examine the association between the three independent variables (PROFESSIONAL, MARKET, and
CULTURAL) and the dependent variable (IFRSforSMEs). Logics relevant to defining CAs’ attitude toward the IFRS for SMEs
will have significant coefficients. Consistent with our theoretical development, we make no prediction about the presence of
one (dominance) or multiple (coexistence) relevant logics.
In our second research question, we assess the heterogeneity among CAs. We study the impact of their different
characteristics on the logics related to their orientation toward the new accounting standards. We divide the three logics
(PROFESSIONAL, MARKET, and CULTURAL) in order to observe the differences among them and to appreciate the influence
of the characteristics of the CAs. We use OLS regressions for Equations (2) and (3), and a logistic regression for Equation (4)
(Wooldridge 2010):
PROFESSIONAL ¼ b0 þ b1 AUD þ b2 EDUC þ b3 TAX þ b4 Prep IFRSforSMEs þ b5 EXPER þ Area Fixed Effect þ e
ð2Þ
MARKET ¼ b0 þ b1 AUD þ b2 EDUC þ b3 TAX þ b4 Prep IFRSforSMEs þ b5 EXPER þ Area Fixed Effect þ e ð3Þ
CULTURAL ¼ b0 þ b1 AUD þ b2 EDUC þ b3 TAX þ b4 Prep IFRSforSMEs þ b5 EXPER þ Area Fixed Effect þ e ð4Þ
We control for Area Fixed Effect to capture unobserved heterogeneity in area (North-West, North-East, Center, South, and
Islands) characteristics of the respondents. Standard errors are clustered at the respondent level.
We investigate the association between the different independent variables representing CAs’ characteristics, i.e., audit
activities (AUD), education (EDU), tax interests (TAX), and level of training (Prep_IFRSforSMEs) and the logics
(PROFESSIONAL, MARKET, and CULTURAL). By looking at the institutional complexity engendered by the IFRS for SMEs,
in this analysis we try to understand whether the balance among logics is heterogeneous across segments of CAs.
Summary Statistics
Table 1 reports the summary statistics. Panel A of Table 1 shows the descriptive statistics. There is no unanimity on
whether to adopt the IFRS for SMEs. The majority of the CAs (57.5 percent) would suggest that their clients use the new
standards, but a substantial proportion of them would take a different position. Despite the efforts that have been made so far by
different institutions, several CAs still have relevant doubts about the new standards. Our multivariate analysis will gather
evidence to understand which of the logics influence attitudes toward the new standards.
First, we can observe the relevance of the professional logic (PROFESSIONAL) and of market logic (MARKET). The
variable CULTURAL shows that the majority of the respondents take into consideration cultural logic in the assessment of the
IFRS for SMEs.
We then observe heterogeneity among the social characteristics of CAs. First of all, the respondents have highly variable
ages (YEAR_BIRTH), ranging from 24 to 83 years old. The majority of them have more than ten years of experience (EXPER)
(62.7 percent) and a high level of education (EDUC), which corresponds to having gained at least a Master’s degree. We
observe that 91.5 percent of the CAs are also certified auditors (AUD). In general, CAs have considerable experience and are
well educated, even if there are significant differences among them. Furthermore, about 70 percent of the CAs affirm that
taxation (TAX) plays a relevant role in the decisions of the SMEs.
Regarding knowledge of accounting standards, we asked CAs to assess their own level from 1 (low) to 7 (high). Consistent
with prior literature (Madsen 2015), we rely on self-assessment to understand the interviewees’ knowledge on a particular
topic. Panel A of Table 1 shows that CAs know the national GAAP (Prep_OIC) well. In fact, the median is five and the average
is even above this level. Knowledge of the IAS/IFRS (Prep_IFRS) is in an intermediary position as it has a median of four and
an average slightly lower than four. Finally, CAs affirm that they have a lower level of knowledge of the IFRS for SMEs
(Prep_IFRSforSMEs). The median is three and the average around three. Even if these findings are the result of self-assessment
and are potentially affected by cognitive bias, they are consistent with prior studies discussing the knowledge of the accounting
standards (Morris, Gray, Pickering, and Aisbitt 2014; Uyar and Güngörmüs 2013; Dulitz 2009). Interviews of the presidents of
the local associations confirm our findings about CAs’ knowledge of the accounting standards. They argue that their members
use local GAAP daily, but that they are aware of the content of the IFRS for SMEs because they have received training about
them. These new accounting standards have also received great attention in practitioners’ journals.
TABLE 1
Summary Statics
Variable Definitions:
PROFESSIONAL ¼ measure of the relevance of the technical characteristics (Section (a) of Appendix A);
MARKET ¼ measure of the relevance of the financial and economic strategic characteristics (Section (b) of Appendix A);
Prep_OICa ¼ knowledge of the Italian GAAP, ranging from 1 (low level) to 7 (high level);
Prep_IFRSa ¼ knowledge of the IAS/IFRS, ranging from 1 (low level) to 7 (high level);
Prep_IFRSforSMEs ¼ knowledge of the IFRS for SMEs, ranging from 1 (low level) to 7 (high level);
YEAR_BIRTHa ¼ year of birth of the CAs;
TAX ¼ perceived relevance of tax rules in SMEs, ranging from 1 (low level) to 7 (high level);
IFRSforSMEs ¼ overall attitude toward the IFRS for SMEs (Section (d) of Appendix A). 1 if positive, 0 negative;
CULTURAL ¼ measure of the relevance of the theoretical framework (Section (c) of Appendix A);
EXPER ¼ level of experience. 1 if greater than or equal to ten years, 0 if lower;
AUD ¼ auditing activities. 1 if the CA is also a certified auditor, 0 otherwise; and
EDUC ¼ level of education. 1 if higher or equal to a Master’s degree, 0 if lower.
Panel B of Table 1 reveals no strong correlations between the variables used in our analyses (usually below 0.50).7 The
variance inflation factors (VIFs) associated with Equations (1)–(4) range between 1.041 and 1.580. Considering the rule of
thumb that states that values above 4 require investigation, and values above ten signal multicollinearity, we exclude the
possibility of the presence of multicollinearity between variables in the regressions (Baum 2006).
7
Untabulated results show that education and experience are negatively correlated (0.61), meaning that more experienced CAs usually have a lower
level of education. Levels of knowledge of the national GAAP and the IAS/IFRS are highly correlated with knowledge of the IFRS for SMEs, and so
they are excluded from the analysis.
TABLE 1 (continued)
Panel B: Correlation Coefficient Matrix
(1) (2) (3) (4) (5) (6) (7) (8) (9)
1. IFRSforSMEs 1.000 0.271 0.304 0.365 0.062 0.278 0.033 0.000 0.002
2. PROFESSIONAL 1.000 0.533 0.222 0.070 0.217 0.060 0.003 0.195
3. MARKET 1.000 0.238 0.038 0.229 0.025 0.006 0.131
4. CULTURAL 1.000 0.002 0.290 0.054 0.074 0.011
5. EXPER 1.000 0.018 0.169 0.354 0.036
6. Prep_IFRSforSMEs 1.000 0.051 0.037 0.073
7. AUD 1.000 0.058 0.048
8. EDU 1.000 0.039
9. TAX 1.000
Correlation matrix for the variables of interest used in the main analysis. Values reported in bold indicate statistical significance at less than 5 percent level.
Variable Definitions:
IFRSforSMEs ¼ overall attitude toward the IFRS for SMEs (Section (d) of Appendix A). 1 if positive, 0 negative;
PROFESSIONAL ¼ measure of the relevance of the technical characteristics (Section (a) of Appendix A);
MARKET ¼ measure of the relevance of the financial and economic strategic characteristics (Section (b) of Appendix A);
CULTURAL ¼ measure of the relevance of the theoretical framework (Section (c) of Appendix A);
EXPER ¼ level of experience. High is greater than or equal to ten years, Low otherwise;
Prep_IFRSforSMEs ¼ knowledge of the IFRS for SMEs, ranging from 1 (low level) to 7 (high level);
AUD ¼ auditing activities. Yes if the CA is also a certified auditor, 0 otherwise;
EDUC ¼ level of education. High is higher or equal to a Master’s degree, Low otherwise; and
TAX ¼ perceived relevance of tax rules in SMEs, ranging from 1 (low level) to 7 (high level).
independent variables, i.e., PROFESSIONAL, MARKET, and CULTURAL. All three logics influence CAs’ orientation
regarding whether to suggest the new standards to their clients, and the coefficients range between 0.548 and 1.455 (significant
at less than 1 percent, two-tailed). Therefore, the institutional acceptance of new standards depends on a set of different logics.
In terms of magnitude, the cultural logic (coefficient b3 ¼ 1.455) plays a key role in determining the attitude toward the new
standards, showing a strong reliance on the accounting tradition and the values in which CAs are grounded. The market logic is
also meaningful and confirms the increasing relevance of commercial values (coefficient b2 ¼ 0.751). The link is less strong for
the elements related to technical expertise than those related to professional logic (coefficient b1 ¼ 0.548).8
Overall, by looking at how CAs respond to institutional complexity engendered by new accounting standards, it emerges
that they show a strong interest in the more commercial-related aspects of the standards. However, the shift toward
commercialism has not been total because the technical aspects of the standards are still relevant to the profession. CAs are also
driven by the accounting culture on which the accounting standards are based, justifying the broad debate on the relevance of
the conceptual framework even at a micro level. All three logics are important in the perception of the new standards and they
define CAs’ response to the presence of institutional complexity.
8
We re-perform all our analyses (Equations (1)–(4)) by measuring the variables PROFESSIONAL and MARKET as dummy variables (1 above median, 0
otherwise) and as decile rankings. We also winsorize the continuous variables at the 1 percent level to mitigate the potential influence of outliers. Finally,
we use the mean scores for the items related to the variables PROFESSIONAL and MARKET. The results are very similar to our core findings.
TABLE 2
Logics and Attitude Toward the IFRS for SMEs
(1) (2) (3)
IFRSforSMEs Std. Error Pr(. jzj)
Intercept 1.048*** 0.276 0.00
PROFESSIONAL 0.548*** 0.152 0.00
MARKET 0.751*** 0.150 0.00
CULTURAL 1.455*** 0.159 0.00
AUD 0.052 0.231 0.82
EDUC 0.026 0.163 0.87
TAX 0.295** 0.145 0.04
Prep_IFRSforSMEs 0.693*** 0.134 0.00
EXPER 0.376** 0.144 0.01
Area FE Yes
Observations 1,268
Pseudo R2 0.390
Pr(. Chi-square) , 0.0001
***, **, * Indicate significance at the 1 percent, 5 percent, and 10 percent level, respectively.
This table presents the impact of logics on CAs’ attitude toward the IFRS for SMEs. We used a logistic model (standard errors are clustered at the
respondent level) for Equation (1):
Variable Definitions:
IFRSforSMEs ¼ overall attitude toward the IFRS for SMEs (Section (d) of Appendix A). 1 if positive, 0 if negative;
PROFESSIONAL ¼ measure of the relevance of the technical characteristics (Section (a) of Appendix A);
MARKET ¼ measure of the relevance of the financial and economic strategic characteristics (Section (b) of Appendix A);
CULTURAL ¼ measure of the relevance of the theoretical framework (Section (c) of Appendix A);
AUD ¼ auditing activities. 1 if the CA is also a certified auditor, 0 otherwise;
EDUC ¼ level of education. 1 if higher or equal to Master’s degree, 0 if lower;
TAX ¼ perceived relevance of tax rules in SMEs, ranging from 1 (low level) to 7 (high level);
Prep_IFRSforSMEs ¼ knowledge of the IFRS for SMEs, ranging from 1 (low level) to 7 (high level); and
EXPER ¼ level of experience. 1 if greater than or equal to ten years, 0 if lower.
attitude toward the new standards (Panel C of Table 3). Auditors have to follow standards that usually are aligned to accounting
standards. Overall, these findings show that the auditing profession is embracing commercial values, but also maintaining its
original identity of controller of accounts and transactions.
CAs with higher levels of education (EDUC) are mainly associated with the cultural logic (Panel C of Table 3). We
explain this result as being due to the long standing and so, widely studied and absorbed fundamentals of the accounting
standards. Moreover, we show that more educated professionals are also negatively associated with the market logic (Panel B,
Table 3), positioning themselves differently from the overall movement of the profession toward the market managerial
approach.
Looking at the CAs who assign relevance to taxation (TAX) in SMEs’ activities, we observe that they are associated with
both professional (Panel A of Table 3) and market (Panel B of Table 3) logics. Firstly, the professional logic is important for
them since they have to deal daily with several technicalities, due to the extreme complexity of fiscal rules and their relationship
with civil code norms and accounting standards. Second, they usually try to benefit from their accounting activities in order to
strategically sell additional services, in particular consulting related to taxation.
Finally, in all three cases the relationship with the variable concerning the level of knowledge of IFRS for SMEs (Prep_
IFRSforSMEs) is always positive and significant. CAs who have been through material, documents, and courses concerning the
new standards are representative of the segments of CAs mobilizing multiple logics in their orientation process. Consequently,
the role played by professional courses, which in Italy are mainly organized with the support of the local associations and
universities, is extremely relevant in facilitating the adoption and implementation of new accounting standards.
TABLE 3
IFRS for SMEs, Logics, and Segments of CAs
PROFESSIONAL ¼ b0 þ b1 AUD þ b2 EDUC þ b3 TAX þ b4 Prep IFRSforSMEs þ b5 EXPER þ Area Fixed Effect þ e ð2Þ
Variable Definitions:
PROFESSIONAL ¼ measure of the relevance of the technical characteristics (Section (a) of Appendix A);
AUD ¼ auditing activities. 1 if the CA is also a certified auditor, 0 otherwise;
EDUC ¼ level of education. 1 if higher or equal to Master’s degree, 0 if lower;
TAX ¼ perceived relevance of tax rules in SMEs, ranging from 1 (low level) to 7 (high level);
Prep_IFRSforSMEs ¼ knowledge of the IFRS for SMEs, ranging from 1 (low level) to 7 (high level); and
EXPER ¼ level of experience. 1 if greater than or equal to ten years, 0 if lower.
9
To monitor the evolution of the Italian professional accounting context, we gathered additional data in the period May–July 2017. We analyzed new
regulation, and the official website of the ODCEC (the national association of CAs). Consistent with Brivot, Cho, and Kuhn (2015) and Suddaby,
Saxton, and Gunz (2015) on the changes in the representation of the profession, we collected data on media and social media disclosure covering the
profession over the period 2014–2017. We also interviewed two current presidents of the local accounting professions and four former presidents. Our
understanding is that the Italian professional accounting context has not experienced any major change since 2013. The major turnaround happened just
after the 2008–2009 financial crisis. Concerning the IFRS for SMEs, the interest toward this project is constantly growing. SMEs need more transparent
and timely information in order to remain competitive in the national and international market. The IFRS for SMEs are expected to improve the access to
financing and the competitiveness of SMEs. Overall, it emerges that our aim of understanding the early stage of the implementation of the new standards
due to the path dependency of institutional change remains timely and relevant.
TABLE 3 (continued)
Panel B: Model (3)
(1) (2) (3)
MARKET Std. Error Pr(. jzj)
Intercept 4.247*** 0.211 0.00
AUD 0.300* 0.161 0.06
EDUC 0.279** 0.111 0.02
TAX 0.317*** 0.098 0.00
Prep_IFRSforSMEs 0.711*** 0.090 0.00
EXPER 0.249*** 0.219 0.00
Area FE Yes
Observations 1,268
Adj. R2 0.075
Pr(. Chi-square) , 0.0001
***, **, * Indicate significance at the 1 percent, 5 percent, and 10 percent levels, respectively.
Table 3 reports the results on the relationship between logics in the response to the IFRS for SMEs and segments of CAs.
Panel B reports the results of the relation between market logic in response to the IFRS for SMEs and segments of CAs. We used an OLS regression
(standard errors are clustered at the respondent level) for Equation (3):
MARKET ¼ b0 þ b1 AUD þ b2 EDUC þ b3 TAX þ b4 Prep IFRSforSMEs þ b5 EXPER þ Area Fixed Effect þ e ð3Þ
Variable Definitions:
MARKET ¼ measure of the relevance of the financial and economic strategic characteristics (Section (b) of Appendix A);
AUD ¼ auditing activities. 1 if the CA is also a certified auditor, 0 otherwise;
EDUC ¼ level of education. 1 if higher or equal to Master’s degree, 0 if lower;
TAX ¼ perceived relevance of tax rules in SMEs, ranging from 1 (low level) to 7 (high level);
Prep_IFRSforSMEs ¼ knowledge of the IFRS for SMEs, ranging from 1 (low level) to 7 (high level); and
EXPER ¼ level of experience. 1 if greater than or equal to ten years, 0 if lower.
CULTURAL ¼ b0 þ b1 AUD þ b2 EDUC þ b3 TAX þ b4 Prep IFRSforSMEs þ b5 EXPER þ Area Fixed Effect þ e ð4Þ
Variable Definitions:
CULTURAL ¼ measure of the relevance of the theoretical framework (Section (c) of Appendix A);
AUD ¼ auditing activities. 1 if the CA is also a certified auditor, 0 otherwise;
EDUC ¼ level of education. 1 if higher or equal to Master’s degree, 0 if lower;
TAX ¼ perceived relevance of tax rules in SMEs, ranging from 1 (low level) to 7 (high level);
Prep_IFRSforSMEs ¼ knowledge of the IFRS for SMEs, ranging from 1 (low level) to 7 (high level); and
EXPER ¼ level of experience. 1 if greater than or equal to ten years, 0 if lower.
standards. The IFRS for SMEs are considered high-quality standards that are likely to improve the financial reporting quality of
the SMEs, in particular in terms of decision-usefulness and reporting transparency.
We strongly believe in the project ‘‘IFRS’’ as well in the ‘‘IFRS for SMEs.’’ The latter could definitely help SMEs in
their external financial communication which is extremely poor today. (Interview C1)
However, they would also require new training for CAs, who have all been exposed to the IFRS from a user perspective,
but rarely from that of a preparer. Several presidents argue that the accounting standards should continuously evolve in line
with changes that take place in the economy, updating elements that would involve both technical and commercial aspects. In
this light, they acknowledge that SMEs are increasingly innovative and need accounting standards that reflect their new
intrinsic nature. CAs support SMEs on a daily basis in developing their businesses and believe that new accounting standards
should support their activities. Nevertheless, the relevance of these standards for SMEs’ interests is a common concern among
interviewees.
The world is changing, and the firms should be ready to disclose relevant information. For instance, the role of
intangibles is much more important now than it was thirty years ago. (Interview C4)
Overall, I believe that the IFRS for SMEs is a valuable project. However, they also have some negative aspects. First,
the large amount of mandatory disclosure to prepare. I’m not sure it is all useful for SMEs’ stakeholders. Second, these
accounting standards could lead to volatile and risky asset valuation. (Interview C2)
Almost all the presidents claimed that SMEs demand from CAs both traditional and consulting services, especially for the
growing external request of additional disclosure. Entrepreneurs and managers need additional support to make their decisions
and CAs can provide consulting services, extending their area of interest to commercial-related activities. From an internal-
company perspective, the IFRS for SMEs could represent an opportunity to define or re-define internal control and risk
management systems. From an external-company point of view, they could facilitate the attraction of new investors and the
development of activities even outside of the Italian borders. Indeed, they open up new opportunities to CAs to expand their
businesses. CAs would need to recruit new staff to face the increasing demand for both technical and commercial services.
Regarding SMEs, I have recently noticed a higher degree of interest among different players (entrepreneurs, managers,
directors. . .) toward accounting issues. They are willing to adopt new tools to support the management in the decision
process and not only to fulfill the technical obligations. (Interview C3)
At the same time, some presidents criticize the Anglo–Saxon approach of the IAS/IFRS. They also express concerns on the
difficulty of actively contributing to the definition of the conceptual framework. They recurrently mention the debate between
fair value and historical value, in particular by referring to the different accounting cultures on which the two approaches rely.
Some standards appear to be problematic to implement, such as the accounting of post-employment benefits or the lack of
classification of balance sheet and income statement. The complexity of the implementation of the IFRS for SMEs could also
be linked to the differences between the national law and the IFRS. Presidents argue that the standard setters should further take
into consideration the different accounting cultures. They often refer to the 2008/2009 financial crisis to highlight the potential
shortcomings of the IFRS during market turmoil.
The financial crisis has strongly affected the implementation of IAS/IFRS: the extreme volatility of the financial
markets and of the related valuation are damaging the reliability of the standards. At least at European level, we should
start considering the preparation of amendments. (Interview C7)
Overall, the different logics coexist because the changes in the profession have been relative and not absolute. They
emerge as relevant in defining CAs’ attitude toward the IFRS for SMEs both from the responses to the questionnaire and from
the interviews performed. We thus present a model of cohabitation among logics in a well-defined societal sector. We
empirically show the relevance of professional, market, and cultural logics, previously only theoretically portrayed, in defining
CAs’ attitude toward new accounting standards. It emerges that at the current stage, the Italian accounting profession is facing a
process of hybridization where several distinctive forces are actually shaping, in different directions, the overall identity.
Turning to our second research on the impact of social characteristics on the three logics, the interviews reported a
segmented profession among CAs. Differences between professionals are also the result of expansion of the profession toward
new businesses and of the increasing regulatory requirements. They report that the members of the professional associations
often complain about the lack of time and the growing amount of administrative procedures that they have to perform.
It is hard to be constantly updated on everything. A fast process of ‘‘specialization’’ is developing and several
professionals are currently collaborating to obtain better performances. (Interview C6)
The local associations are considered as the glue of the profession, but the tensions between the groups of interests remain
strong. On the one hand, the importance of the local professional associations in defining the accounting rules is decreasing. On
the other hand, through their meetings, courses, and documents, local professional associations complement CAs’ activities and
represent their reference point. In this way, they de facto unite together CAs and ensure that they can function effectively.
However, local professional associations find it difficult to address the different needs of the sub-categories of CAs, and to
maintain high-level professional training and education.
So far, the courses that have been proposed by the local associations have been more focused on tax legislation and on
national GAAP. We are currently revising our offer. We try to adapt CAs training to market needs, even if it is really
hard to address all the potential interests and perspectives. But it is very hard! (Interview C4)
To summarize, these findings document that divergent positions and ideas exist among CAs relative to institutional
complexity engendered by accounting harmonization. Indeed, it is possible to identify segments with defined characteristics.
The homogeneous approach previously adopted by accounting researchers and standard setters may lead to a divergence
between when accounting standards have been decided at the top level and when they are implemented daily at the micro-level.
We overcome the notion of the ‘‘black-box’’ and highlight the costs associated with such a segmented profession. The different
relevance assigned to the logics across the various segments of CAs increases the potential divergence in terms of
implementation.
different accounting cultures still shape today’s implementation of the accounting standards. It would also be interesting to
investigate the professional associations’ role in (de)legitimizing the accounting harmonization process and their impact on the
micro-structure of the profession. Professional associations still represent a key factor within the accounting profession.
Specifically, they are a relevant and determinant voice in the more macro-level activities, i.e., lobbying in the accounting
harmonization process, due to the need for financial and human resources for this type of activity.
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APPENDIX A
Measurement of Variables
Appendix A reports the questions used to determine the variables adopted in our analysis. We report the titles of sections (a)–(i )
to facilitate the comprehension of the measurement of the variables. They were not included in the survey sent to the CAs.
(a) Usefulness of the technical characteristics of the IFRS for SMEs (from 1 ¼ not at all to 7 ¼ very useful)
Do you think that the following simplifications of the IFRS for SMEs with respect to the IAS/FIRS are useful for firms?
1. Simplified hedge accounting
2. Expensing development costs (including those that should be capitalized)
3. Expensing all borrowing costs (including those that should be capitalized)
4. Simplified defined benefit pension plan accounting
5. Amortization of goodwill over ten years (if fair value not determinable)
6. Cost model for associates and joint ventures (in addition to the equity method)
7. Using directors’ judgment in determining fair value in share-based payments
8. Easier first-time adoption
Do you think that the omissions of the IFRS for SMEs with respect to the IAS/FIRS are useful for firms?
9. Segment reporting (IAS 14 – IFRS 8)
10. Interim financial reporting (IAS 34)
11. Insurance (IAS 4)
12. Assets held for sale (IFRS 5)
13. Earnings per share (IAS 33)
(b) Usefulness of the financial and economic strategic characteristics of the IFRS for SMEs (from 1 ¼ not at all to 7 ¼ very useful)
Do you agree with the following statements on the benefits of the IFRS for SMEs for firms?
1. Higher competitiveness at international level for SMEs
2. Possibility to attract foreign investments
3. Easier M&A operations
4. New source of financing for firms
(c) Endorsement of the theoretical framework of the IFRS for SMEs (Yes/No)
1. Do you agree with the theoretical framework used for the IFRS for SMEs?
(d) Overall attitude toward the IFRS for SMEs (Yes/No)
1. Would you suggest the IFRS for SMEs to your clients in case of voluntary adoption?
(e) Auditing (Yes/No)
1. Are you a certified auditor?
(f ) Education (multiple choice ranging from high school diploma to Ph.D.)
1. What is your level of education?
(g) Knowledge of the IFRS for SMEs (from 1 ¼ insufficient to 7 ¼ really good)
1. How would you consider your level of knowledge of the IFRS for SMEs?
(h) Taxation (from 1 ¼ low to 7 ¼ high)
1. How relevant are tax rules in the accounting decisions of SMEs?
(i ) Experience
1. When did you become a certified chartered accountant?
APPENDIX B
Factor Analysis
Regression Proportion Cumulative
Variable Factor Eigenvalue Explained Explained
PROFESSIONAL 1 7.559 0.58 0.58
2 1.069 0.08 0.66
3 0.646 0.05 0.71
4 0.538 0.04 0.75
5 0.468 0.04 0.79
6 0.457 0.03 0.82
7 0.410 0.03 0.85
8 0.394 0.03 0.88
9 0.343 0.03 0.91
10 0.314 0.02 0.93
11 0.301 0.02 0.95
12 0.276 0.02 0.97
13 0.224 0.02 1.00
MARKET 1 3.010 0.75 0.75
2 0.375 0.09 0.84
3 0.357 0.09 0.93
4 0.259 0.06 1.00
We list the variables used to estimate the factors in Appendix A. We retain factors with Eigenvalues greater than 3 to estimate the proxy values. The part of
shared variance in the input variables explained by a factor is defined as ‘‘Proportion Explained.’’
APPENDIX C
Variables Definitions
Variable Definition
IFRSforSMES Overall attitude toward the IFRS for SMEs (Section (d) of Appendix A). 1 if positive, 0 negative.
PROFESSIONAL Measure of the relevance of the technical characteristics (Section (a) of Appendix A).
MARKET Measure of the relevance of the financial and economic strategic characteristics (Section (b) of Appendix A).
CULTURAL Measure of the relevance of the theoretical framework (Section (c) of Appendix A).
EXPER Level of experience. 1 if greater than or equal to ten years, 0 if lower.
Prep_IFRSforSMEs Knowledge of the IFRS for SMEs, ranging from 1 (low level) to 7 (high level).
AUD Auditing activities. 1 if the CA is also a certified auditor, 0 otherwise.
EDUC Level of education. 1 if higher or equal to a Master’s degree, 0 if lower.
TAX Perceived relevance of tax rules in SMEs, ranging from 1 (low level) to 7 (high level).
Prep_OIC Knowledge of the Italian GAAP, ranging from 1 (low level) to 7 (high level).
Prep_IFRS Knowledge of the IAS/IFRS, ranging from 1 (low level) to 7 (high level).
YEAR_BIRTH Year of birth of the CAs.