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Suitability of
Empirical evidence of the IFRS
suitability of IFRS in
emerging markets
Ghassan H. Mardini, Rula S. Wadi and Osama A. Mah’d 553
College of Business and Economics, Qatar University, Doha, Qatar
Received 3 April 2017
Revised 20 September 2017
Accepted 27 October 2017
Abstract
Purpose – The purpose of this study was to assess the suitability of International Financial Reporting
Standards (IFRS) in emerging markets such as Qatar. The current research attempts to obtain insights into
the advantages and disadvantages of IFRS implementation in Qatar based on the perceptions of top
management, academics in accounting and external auditors.
Design/methodology/approach – A questionnaire survey was the main tool used in this research. A
total of 120 questionnaires were distributed to financial managers, academics and external auditors. Of the 97
replies (80 per cent), 91 completed questionnaires were analysed.
Findings – The results suggest that IFRS implementation is suitable for the business environment of Qatar
because the adoption of IFRS provides many advantages to the Qatari business environment, regulations and
stock market without incurring additional major costs. Moreover, IFRS imposes no major constraints on the
business environment or Islamic social responsibility and education in Qatar.
Practical implications – The results of this research paper will help regulators in Qatar and other Gulf
Cooperation Council (GCC) countries develop accounting regulations.
Originality/value – This paper provides empirical evidence of the suitability of IFRS in emerging
markets in general and the GCC region in particular and enhances the level of understanding of IFRS
worldwide.
Keywords IFRS, Suitability, Emerging markets, GCC, Qatar, Qatar Exchange
Paper type Research paper

1. Introduction
Financial information is the most important source of information for internal and external
users (Gordon, 2008; Jermakowicz and Gornik-Tomaszewski, 2006; Callao et al., 2007;
Rahman et al., 2014; Houqe and Monem, 2016; Tahat et al., 2016; Mohammadi and Mardini,
2016; Mardini and Tahat, 2017). It provides qualitative and quantitative data about an entity
and its economic situation that aids financial information users in their decision-making
(Benjamin and Stanga, 1977). To meet users’ decision-making needs, financial information
must be relevant and reliable. Accordingly, after its founding in June 1973, the International
Accounting Standards Committee (IASC) issued a set of International Accounting
Standards (IASs) and later published a conceptual framework in 1989 to enhance the
qualitative characteristics of financial information (relevant, reliable, understandable and
comparable). In 2001, IASC was succeeded by the International Accounting Standards
Board (IASB), and some of the IASs were subsequently replaced with the new International
Financial Reporting Standards (IFRS). In 2005, a study by Kathryn (2005) reported that Accounting Research Journal
approximately 100 countries had begun publishing their listed companies in accordance Vol. 32 No. 4, 2019
pp. 553-567
with IFRS. In September 2010, IASB released its “Conceptual Framework for Financial © Emerald Publishing Limited
1030-9616
Reporting (the IFRS Framework)” (International Accounting Standards Board, 2010). This DOI 10.1108/ARJ-04-2017-0065
ARJ framework clearly states that the general objective of financial reporting is to provide useful
32,4 information for “present and potential investors, lenders and other creditors” (International
Accounting Standards Board, 2010, Para OB2). Currently, the number of countries that have
adopted IFRS has increased to 120 (American Institute of Certified Public Accountants,
2017). However, attempts by IASB to increase the harmonisation of financial information
worldwide may lead to one-size-fits-all regulation of mandatory disclosures. Countries with
554 different perspectives, beliefs and business environments may consequently struggle with
and fail to comply with IFRS requirements owing to specific unsuitability.
Over the past few decades, the financial and economic environment of Qatar has changed
significantly. In its 2030 Qatari development vision, the Qatari government focused greater
attention on non-oil-related industries and diversification of income resources (IAS Plus,
2006). This shift emphasises the need to adopt IFRS to enhance the legitimacy of Qatar as a
recipient of foreign direct investment. To facilitate this process, the government has
introduced a number of business laws, including the Qatari Companies Law of 2002, which
requires all listed companies to conform with IFRS. Given the long time span of the
development vision, users of financial statements (i.e. management) in Qatar should be
familiar with IFRS and its level of suitability to the Qatari business environment.
Qatar has adopted IFRS in response to global pressure to develop its economy to be
viewed as a legitimate member of international capital markets. Like many emerging
markets, Qatar has trading partners in the West and is subject to global institutionalising
pressures from Western organisations and bodies. It has been argued that the regulatory
system and the willingness of decision-makers to respond positively affect the extent to
which IFRS is adopted at the organisational level. Emerging markets such as Qatar will face
difficulties in implementing IFRS and ensuring that this implementation is fully realised.
Qatar represents an interesting environment in which to investigate the suitability of
IFRS in an emerging market. First, Qatar has a well-functioning stock market that for
several years has required companies to report using IFRS. Moreover, Qatar has
experienced booming economic growth since the adoption of IFRS because of foreign
investment in the region. Qatar is also home to export and import activities of multi-activity
firms throughout the financial, manufacturing and services sectors, such as the Qatari oil
and gas sector. Prior studies of IFRS suitability have tended to focus on developed countries,
and thus investigating this issue in the Qatari environment may yield different results
because the capital market of Qatar differs significantly from those in developed countries.
Specifically, the market capitalisation and the number of listed firms are much larger in
developed countries (Alattar and Al-Khater, 2007; Mardini and Almujamed, 2015). These
conditions provide an interesting research scenario in which to study IFRS suitability in
Qatar.
The primary objective of this paper is to assess whether financial information under
IFRS is suitable for users’ needs in emerging markets. This study contributes to and extends
the extant literature, which has mainly focused on developed economies, by providing
empirical evidence of the suitability of IFRS from the perspective of internal users
(management) and external parties (i.e. academics and external auditors). The findings will
be of interest to accounting regulators, particularly IASB, as IASB implementation reviews
are on-going for several standards (i.e. IFRS 8 and IFRS 9).
The paper proceeds as follows. The following section discusses the Qatari financial
reporting framework to provide a suitable understanding of the implementation of IFRS in
Qatar. Section 3 provides the literature review and theoretical framework. Section 4
elaborates the research methodology. Section 5 discusses the results, and section 6 ends with
conclusions, limitations and directions for future research.
2. Institutional background Suitability of
Qatar is a small country that is experiencing rapid economic growth. In addition, Qatar is a IFRS
multi-cultural country, with a high percentage of non-Qataris living and working in Qatar.
This great diversity demands the adoption of well-established norms and standards, such as
IFRS. The economy of Qatar mainly depends on its natural resources, including oil and gas.
The country has grown dramatically over the past few decades; in particular, the country’s
GDP has increased from US$23.53bn in 2004 to US$171.5bn in 2012. The country intends to
host the 2022 FIFA World Cup and has established a national development plan for 2030. 555
Accordingly, the government is undertaking huge infrastructure investments to entice
major multinational companies to invest in Qatar. Recent increases in oil and gas production
as well as economic diversification have accelerated the growth of Qatar’s economy.
The establishment of the Doha Stock Market (DSM) has encouraged many foreign
companies to operate in Qatar. Qatari policy-makers have mandated that all listed
companies comply with IFRS and subject their reports to review by an independent
external auditor. In 1997, DSM [now known as the Qatar Exchange (QE)] had 17 listed
companies with a market capitalisation of US$1.6bn. DSM’s structure was significantly
improved in 2009 in response to the 2008 financial crisis via the signing of a strategic
partnership with the New York Stock Exchange and Euronext. Consequently, the DSM
was rebranded as the QE, and technologically and procedurally advanced trading and
forecasting tools were implemented, culminating in the ranking of QE on the Morgan
Stanley Capital International and the Emerging Markets Index in 2014 (Financial Times,
2013; Oxford Business Group, 2014). Currently, QE has 44 listed companies with a market
capitalisation of approximately US$142bn.

3. Literature review and theoretical framework

3.1 Literature review
Concerns about IFRS requirements to disclose financial information have received attention
from many researchers for a single country or across countries or regions. Prior studies have
indicated that certain countries acquire the expected benefits from IFRS, such as improved
accounting reporting quality and cost-benefit analysis (Apergis et al., 2014; Houqe and
Monem, 2016). Uyar et al. (2016) provided evidence that financial reporting under IFRS can
improve the financial position, performance and cash flows of an entity, which would be
useful for users making economic decisions.
Jermakowicz and Gornik-Tomaszewski (2006) studied the implementation of IFRS in the
European Union (EU) by conducting personal interviews and questionnaires with EU
multinational listed companies. Most of the sample companies had adopted IFRS for
consolidation purposes, as required by the regulator, but the majority found it very costly,
complicated and burdensome. The respondents expressed their dissatisfaction with the
complexity of IFRS and lack of guidance provided by the regulatory body. Moreover, after
the implementation of IFRS, the companies worried about the volatility of financial results
because IFRS is based on the fair value accounting method.
An empirical study by Callao et al. (2007) determined the impact of IFRS on financial
reporting among 35 Spanish listed companies in terms of comparability and relevance. The
researchers observed significant differences in accounting figures and financial ratios
between Spanish Accounting Standards and IFRS, indicating a lack of comparability of the
two standards. In addition, the investors acknowledged that IFRS-compliant financial
reporting did not produce a significant improvement in relevance. Furthermore, for the
reason IFRS is based on fair value accounting, investors experienced great differences
between book value and market value, which they did not view positively.
ARJ Jermakowicz et al. (2007) examined the challenges, benefits and value relevance of IFRS
32,4 adoption in a German context. A questionnaire was sent to the executives of sample
companies; the responses showed that most of the companies agreed that implementing
IFRS improves the comparability of financial statements. However, the complexity of IFRS,
the lack of guidance for implementation and the volatility of earnings owing to the fair value
method were identified as potential challenges in the conversion process.
556 Developing countries are confronted by additional challenges and obstacles in adopting
and implementing IFRS. In a study of the implementation of IFRS in developing countries,
Zeghal and Mhedhbi (2006) studied the impacts of economic growth, level of education,
degree of external economic openness, culture and existence of a capital market. The
researchers found that higher literacy rates, the existence of capital markets and an Anglo-
American culture are associated with a higher level of adoption in developing countries.
Elias (2012) examined the impact of mandatory adoption of IFRS on the quality of financial
reporting and found that IFRS increased loss recognition and the value of relevance.
However, with respect to quality, Elias observed that IFRS adoption resulted in greater
losses and lower reported earnings; therefore, he concluded that evidence that IFRS
increases quality remains insufficient. By contrast, Chua et al. (2012) concluded that the
mandatory adoption of IFRS resulted in “better” accounting quality in Australia.
The relationships of accounting and corporate disclosure environmental variables with
wider economic and social variables have also been studied (Rahman et al., 2014; Frias-
Aceituno et al., 2014). Houqe and Monem (2016) examined the contribution of accounting to
communities on a cross-country basis. In particular, Houqe and Monem (2016) investigated
the relationships of IFRS adoption and disclosure level with perceived corruption in
developing and developed countries. An important and interesting finding emerged in
Houqe and Monem (2016) that developing countries gained more benefits from IFRS
adoption than developed countries. Specifically, Houqe and Monem (2016) found that IFRS
adoption led to a reduction in perceived corruption, and the reduction in perceived
corruption is more pronounced in developing countries than in developed countries.
With respect to developing countries in the Middle East, AlGhamdi (2014) examined the
relevance of IFRS in the emerging market of Saudi Arabia and found that users favoured
immediate conversion to IFRS because it serves the market and users of financial reporting.
Kiliç et al. (2016) studied IFRS preparedness among small and medium entities in Turkey.
The researchers found that preparedness for IFRS was low and that most of the previously
mentioned factors specific to developing countries had an impact on this low level of
adoption.
Thus, this paper attempts to address the gaps in the literature on the suitability of IFRS
in emerging markets. Specifically, this study explores the suitability of IFRS from the
perspectives of company management, academics and external auditors. This paper also
compares the views of the three groups, thereby extending the generalisability of the study’s
findings to a range of developing countries. Moreover, the research instrument considered
additional dimensions regarding the suitability of IFRS compared with prior studies.
Specifically, the questionnaire survey included statements not only on the relevance and
reliability of financial information under IFRS but also on the suitability of IFRS in terms of
economic growth, regulations, Islamic corporate responsibility and academic institutions.

3.2 Theoretical framework

The objective of financial statements is to “provide information about the financial position,
performance and changes in financial position of an entity that is useful to a wide range of
users in making economic decisions” (International Accounting Standards Committee
(IASC), 1989, Para 12). To accomplish this objective, the IASC issued its “Framework for the Suitability of
Preparation and Presentation of Financial Statements” in September 1989 (IASC, 1989), IFRS
which was implemented by IASB in April 2001. This framework identified the following
four key qualities of financial information as useful: relevance, reliability, understandability
and comparability.
In September 2010, IASB released its “Conceptual Framework for Financial Reporting
(The IFRS Framework)” (International Accounting Standards Board, 2010), which states
that the information in financial reporting should be useful for lenders, investors and other 557
creditors who “use that information to make decisions about buying, selling or holding
equity or debt instruments and providing or settling loans or other forms of credit.” This
research uses the classic approach issued by IASB. Thus, this paper adopts relevance,
faithful representation, understandability and reliability as the main research instruments
for investigating the suitability of financial information and reporting and the usefulness of
this information to academics and professionals in Qatar.

4. Research methodology
4.1 Sampling
The survey targeted three categories of respondents. The first category comprised financial
managers of the 44 companies listed on QE as of February 2016, as they are the main
decision-makers for IFRS applicability (AlGhamdi, 2014). In addition, the respondents in
this category hold crucial positions responsible for managing the company’s financial
reporting matters and making company-wide resource allocation decisions (Jermakowicz
and Gornik-Tomaszewski, 2006). As the second and third categories of respondents, the
perceptions of academics in accounting and external auditors were obtained. These sample
targets were chosen to obtain insights into the study subject from both professionals and
academics.
The sample size of 120 questionnaires was distributed among the three categories: 40
questionnaires to financial managers covering the 44 listed companies on QE; 40
questionnaires to academics, including accounting faculty members from Qatar
University, Carnegie Mellon University at Qatar Foundation, College of the North
Atlantic – Qatar and Ahmed Bin Mohammed Military College; and 40 questionnaires to
external auditors covering the Big Four audit firms: PricewaterhouseCoopers (PWC),
Deloitte and Touche (Deloitte), Ernst and Young (EY) and KPMG. These three groups
were chosen because they are the main users of IFRS and were assumed to have the most
experience and sufficient knowledge concerning IFRS (Russell, 2015; Mardini et al., 2015;
Tahat et al., 2016).
The response rate was approximately 80 per cent (97 participants) among all categories.
Some participants did not respond at all, whereas other surveys were not fully completed.
Thus, the final sample was 30 financial managers, 30 academics in accounting and 31
external auditors; the external auditors were ultimately attributed 30 surveys to avoid any
unnecessary significant differences across the three categories. The final sample process is
summarised in Table I.

4.2 Research instrument

The main objective of this study was to gain insights into the perceptions of top
management, academics in accounting and external auditors about the suitability of IFRS in
Qatar. Accordingly, a survey questionnaire method was used. Although interviews might
have yielded deeper insights into the issues raised, the questionnaire survey allowed us to
ascertain the views of a larger sample and obtain a wider understanding of the topic
ARJ investigated in this paper (Dillman et al., 2009; Mardini and Tahat, 2017). The questionnaire
32,4 was developed based on benefits and obstacles of IFRS adoption identified in prior studies
and the IASB 2010 Conceptual Framework of the usefulness of financial information under
IFRS (International Accounting Standards Board, 2010). This framework classifies
relevance and faithful representation as the “fundamental qualitative characteristics” of
financial information, whereas comparability, verifiability, timeliness and understandability
558 are considered “enhancing qualitative characteristics.” Thus, the research instrument was
based on the decision usefulness characteristics of relevance, faithful representation,
understandability and reliability.
Most prior studies have either sought the perceptions of interested parties in developed
European countries regarding the suitability of IFRS (Jermakowicz and Gornik-
Tomaszewski, 2006; Jermakowicz et al., 2007) or examined the level of financial disclosures
under IFRS (Uyar et al., 2016). By contrast, the current investigation ascertains the views of
financial managers, academics in accounting and external auditors regarding the quality (in
terms of usefulness) and suitability of financial information provided under IFRS for a non-
European developing country, namely Qatar. Specifically, the questionnaire survey was
used to investigate two themes: the advantages and disadvantages of IFRS convergence.
The questionnaire consisted of three sections: the first section sought demographic
information about the sample respondents, the second section consisted of 13 questions
regarding the advantages of IFRS adoption by Qatar and the third section consisted of 8
questions regarding the obstacles and disadvantages of IFRS adoption. Each question on the
advantages or disadvantages resulted in a conclusion. For instance, if the respondent disagreed
with an advantage statement, the advantage was considered a disadvantage from the sample
respondent’s perspective and vice versa. A five-point Likert scale was used in which 5
represented “strongly agree” and 1 indicated “strongly disagree.” To obtain further comments
from the respondents, space was provided for optional comments on the topic. The researchers
conducted a pilot study of five financial managers, five academics and three external auditors
to pre-test whether the survey instrument was clear and obtained the information sought and
to enhance the questionnaire’s structure and validity. The results were analysed by descriptive
statistics, ANOVA tests, correlation analysis (Pearson) and the Kruskal–Wallis test.

5. Results and discussion

5.1 Demographic analysis of participants
The main objective of the study was to assess the suitability of IFRS for emerging markets
such as Qatar. This research explores the advantages and disadvantages of IFRS
implementation in Qatar based on the perceptions of top management, academics in
accounting and external auditors about the suitability of IFRS in Qatar. These perceptions

Sampling/categories FM AA EA

Initial sample 40 40 40
Responses 34 32 31
Response rate (%) 85 80 77.5
Incomplete responses 4 2 0
Avoid statistical differences – – 1
Final sample 30 30 30
Table I.
Final sample process Notes: FM, financial managers; AA, academics in accounting; EA, external auditors
were obtained via a questionnaire survey with 30 participants per group. The current Suitability of
subsection summarises the demographic information of the participants using certain IFRS
descriptive statistics to provide insights into the participants’ backgrounds. As shown in
Panel A of Table II, a plurality of financial manager respondents were from the banking and
financial services sector (36.7 per cent), followed by the telecom sector (30 per cent). The
remainder of the sectors listed on the panel are well represented in the total of the study
sample[1]. Panel B of Table II summarises the rank (title) of the accounting academics who
participated in the study. The academic respondents were faculty members of Qatar 559
University, Carnegie Mellon University at Qatar Foundation, College of the North Atlantic -
Qatar and Ahmed Bin Mohammed Military College. A majority of the academic respondents
were Assistant Professors (66.6 per cent), followed by Associate Professors (23.3 per cent)
and Full Professors (10.0 per cent). The job titles of the participants in the third group
(external auditors), which included the Big Four auditing firms (PWC, Deloitte, EY and
KPMG), are shown in Panel C of Table II.
Panel A of Table III indicates that a plurality of respondents were 22-34 years old and 35-
44 years old (37.7 and 37.7 respectively), whereas a minority were older than 45 years (24.6
per cent). Panel B of Table III shows the years of experience for the respondents across the
three groups. The largest group of respondents had seven or more years of experience (36.6
per cent), followed by 1-3 years (32.3 per cent). The questionnaire survey also included
certain demographic information, such as the gender and nationality of the respondents.

Industry No. (%)

Panel A: Industry membership of financial managers

Banks and financial sector 11 36.7
Consumer goods and services 1 3.35
Industrial 1 3.35
Insurance 2 6.70
Real estate 3 10.0
Telecoms 9 30.0
Transportation 3 10.0
Total 30 100
Panel B: Academic title held by the academic accountants
Academic title
Assistant professor 20 66.6
Associate professor 7 23.3
Full professor 3 10.0
Total 30 100
Panel C: Job title held by external auditors
Position title
Staff auditor 5 16.7
Consulting senior auditor 11 36.6
Senior auditor 12 40.0 Table II.
Audit manager 2 6.70 Industry
Total 30 100 membership, the
Notes: Panel A of the table shows the industry membership of the financial managers group; whereas academic title and
Panel B illustrates the academic title held by the academic accountants group. Panel C shows the external job title of
auditors’ job titles respondents
ARJ FM AA EA Total
32,4 Category (in years) No. (%) No. (%) No. (%) No. (%)

Panel A: Age
22-34 13 14.4 7 7.8 14 46.6 34 37.7
35-44 15 16.7 9 10.0 10 33.4 34 37.7
45-54 2 2.2 7 7.8 6 20.0 15 16.7
560 55-64 0 0 7 7.8 0 0 7 7.9
Total 30 100 30 100 30 100 90 100
Panel B: Years of experience
Experience (in years)
1-3 12 13.3 12 13.3 5 16.7 29 32.3
4-6 13 14.4 5 5.6 10 33.3 28 31.1
7 5 5.6 13 14.4 15 50.0 33 36.6
Table III. Total 30 100 30 100 30 100 90 100
Age and years of Notes: Panel A of the table summarises the age category of respondents per group, whereas Panel B shows
experience of years of experience of respondents per group. FM, financial managers; AA, academic accounting; EA,
respondents external auditors

The respondents were mainly males (86 of 90 respondents; 95.6 per cent) and non-Qataris (82
of 90; 91.1 per cent), highlighting the diverse, multicultural nature of Qatar.
The demographic information and its analysis are useful to this study on many levels. First,
the information signals that the respondents were sufficient to answer the questionnaire in a
professional manner. Specifically, a majority of respondents were well experienced in their
field, were young and varied in terms of background and culture nationality. Second, the
financial manager respondents were from all sectors of QE; the academics in accounting
represented all academic rankings, and the external auditor participants represented all of the
Big Four auditing firms. The quality of this sample improved and enhanced the subsequent
analysis as well as the generalisability of the findings to global business environments in
general and Gulf Cooperation Council (GCC) in particular.

5.2 IFRS suitability

This subsection discusses the evidence of IFRS suitability in Qatar based on the perceptions
of financial managers, academics in the accounting field and external auditors. Table IV
illustrates the participants’ views of the advantages of IFRS for the Qatari business
environment. Most of the respondents agreed that the adoption of IFRS is beneficial for the
Qatari business environments in many ways. Specifically, most participants across the three
groups agreed that IFRS is helpful to both local and foreign investors (mean of 4.17 and 4.28,
respectively). Moreover, the respondents considered IFRS a helpful set of standards that
develops and enhances the Qatari business environment (mean of 3.91), stock market (mean
of 3.98) and regulators (mean of 3.96 for enhancement of the Qatari Companies Law of 2002
and mean of 4.06 for the development of the law). However, according to the Kruskal–Wallis
test, the responses to some statements differed significantly among the three groups at a p
value of >0.01, such as statements 6 and 7 (Tables IV and V).
However, the responses to other statements differed at a significance level of less than 10
per cent or 5 per cent. All groups indicated that IFRS has dramatically enhanced and
developed the Qatari Companies Law of 2002 (means of 3.96 and 4.06, respectively),
suggesting that IFRS has had a huge impact on the regulation of the business environment
 Mean and SD per group
No. Statement FM AA EA Total Sign.

1 Increases local investors’ confidence in financial reporting 4.23 4.03 4.23 4.17
0.68 0.81 0.73 0.74
2 Increases foreign investors’ confidence in financial reporting 4.37 4.47 4.00 4.28 *
0.72 0.86 0.45 0.68
3 Leads to more foreign capital flow into the country 4.30 4.33 3.63 4.09 *
0.65 0.88 0.81 0.78
4 Increases the QE efficiency 4.10 4.40 3.43 3.98
0.80 0.81 0.82 0.81
5 Increases the growth of international business in Qatar 4.13 3.93 3.67 3.91
1.07 0.78 0.66 0.84
6 Enhances recent Qatari regulations (company law No. 5 of 2002) 3.97 4.10 3.80 3.96 ***
0.81 0.66 0.76 0.74
7 Develops recent Qatari regulations (company law No. 5 of 2002) 3.83 4.13 4.20 4.06 ***
0.91 0.78 0.81 0.83
8 Increases the level of financial reporting and disclosures 4.33 4.40 4.23 4.32
0.92 0.67 0.63 0.74
9 Improves the quality of financial reporting and disclosures 3.93 4.47 4.33 4.24
0.64 0.63 0.66 0.64
10 Enhances corporate financial performance and position 3.77 3.50 4.13 3.80
1.25 1.04 0.63 0.97
11 Reduces preparation cost of financial reporting 2.30 2.70 2.70 3.23
0.75 1.24 0.65 0.88
12 Increases the relevance of financial reporting to users of financial statements 3.80 4.23 3.90 3.98 *
1.10 0.73 0.71 0.85
13 Increases the faithful representation of financial reporting to users of financial statements 4.17 4.33 4.27 4.26
0.38 0.66 0.58 0.54

Notes: This table revels the advantages behind the adoption of IFRS in Qatar in accordance with the questionnaire survey used in the current study. It also
shows the mean and standard deviations among the three groups. FM, financial managers; AA accounting academics; EA, external auditors. The five-point
Likert scale has been used to answer the statements included in the Table (1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree and 5 = strongly agree). Some
statements show a statistical difference among the three groups (* at 10%, ** at 5% and *** at 1%) using the Kruskal–Wallis test. The x 2 test shows that the
proportions in each category are different across the FM and AA groups with the EA group ( x 2 = 17.991, p-value < 0.01)

of advantages of
Descriptive statistics
Table IV.

IFRS
561
Suitability of
IFRS
 IFRS
32,4
ARJ

562

Table V.

of disadvantages of
Descriptive statistics
Mean and S.D. per group
No. Statement FM AA EA Total Sign.

1 The convergence to IFRS may lead to a contradiction with Islamic corporate 2.50 3.07 3.17 2.91
responsibility that includes community finance standards such as Zakat, Riba and fair 1.11 0.94 0.65 0.90
value
2 The financial information prepared under IFRS may lead to misunderstood by users of 2.80 2.60 2.50 2.63
financial statements 1.06 1.10 0.82 1.00
3 IFRS being translated from English to Arabic may lead to being misunderstood by 2.83 2.90 2.70 2.81
Arabic speakers and users 1.26 1.24 0.92 1.14
4 IFRS are complicated and difficult to understand 2.90 2.53 2.60 2.68
1.06 1.20 0.67 0.98
5 A lack of adequate knowledge and experience may lead to IFRS being used wrongly 4.30 4.07 4.43 4.27 *
0.79 0.74 0.50 0.68
6 Academic institutes have not paid attention to IFRS in their accounting programmes 2.50 2.53 2.13 2.39
1.20 1.43 0.57 1.07
7 The Qatari business environment is not ready for convergence with IFRS 2.80 2.67 3.10 2.86
1.06 1.15 1.24 1.15
8 The implementation of IFRS is very costly 2.70 2.97 3.33 3.00
0.95 0.93 0.66 0.85

Notes: This table revels the disadvantages of the adoption of IFRS in Qatar in accordance with the questionnaire survey used in the current study. It also shows
the mean and standard deviations among the three groups. FM, financial managers; AA, accounting academics; EA, external auditors. The five-point Likert scale
has been used to answer the statements included in the table (1 = strongly disagree, 2 = disagree, 3 = neutral, 4 = agree and 5 = strongly agree). Some statements
show a statistical difference among the three groups (*at 10%, ** at 5% and *** at 1%) using the Kruskal–Wallis test. The x 2 test shows that the proportions in
each category are not different across the groups ( x 2 = 1.469, p-value < 0.10)
from all perspectives and has played an important role in the development and improvement Suitability of
of the Qatari Companies Law. This impact may be explained in the view of coercive pressure IFRS
in the institutional approach (Covaleski and Dirsmith, 1995; DiMaggio and Powell, 1983;
Dillard et al., 2004; Hussain and Hoque, 2002), which, according to Guler et al. (2002), is
represented by rules enshrined in regulatory systems and can also include pressure from the
global networks of multinational corporations.
Surprisingly, most participants indicated that IFRS did not reduce the preparation costs of
financial statements (mean of 3.23); however, they did not find the implementation of IFRS very
563
costly (mean of 3.00, Table V). This finding suggests that the implementation and adoption of
IFRS was a wise cost-benefit process for Qatar in general and its business environment in
particular because the advantages of IFRS for the Qatari business environment have not
required major implementation costs. It is cheaper for an economy to become familiar with one
set of global standards than several local standards (Barth, 2008). Moreover, IFRS proponents
argue that IFRS reduces information costs to an economy, particularly as capital flows and
trade become more globalised (Leuz, 2003; Barth, 2008). In terms of the qualitative
characteristics of financial reporting, the participants believed that IFRS provides more
relevant and faithful representations of financial statements to users than the generally
accepted accounting principles (GAAP) used in the country before the adoption of IFRS.[2]
Table V shows the respondents’ perceptions of the disadvantages of IFRS for the Qatari
business environment. It is clear that the respondents considered the implementation of IFRS
in Qatar to be non-problematic and without major disadvantages. For instance, the majority
of the respondents found that the convergence to IFRS did not lead to a contradiction with
Islamic social corporate responsibility reported by Qatari listed companies (mean of 2.91).
Moreover, the majority of the respondents indicated that financial reporting under IFRS did
not lead to misunderstanding by the users of financial statements (mean of 2.63) and that
IFRS was not difficult to understand (mean of 2.68). These results suggest that the financial
information reported under IFRS is more understandable and easier than GAAP for the users
of financial statements to adopt than it is misleading. IFRS provides a globalised set of
accounting standards that encourage Qatari corporations to provide trustworthy and reliable
financial information. Although the respondents considered IFRS understandable, they noted
that knowledge and experience are required to avoid incorrect use of financial statements
(mean of 4.27). Thus, although IFRS is understandable, relevant, and faithfully represents
financial statements, the implementation and applicability of IFRS require knowledge to
ensure that these benefits are provided to the business environment globally and to the
Qatari business environment in particular. Academic institutions in Qatar have provided
sufficient IFRS knowledge to their students and the Qatari community. Specifically, the
majority of participants in this study agreed that academic institutions in Qatar have focused
on IFRS in their programmes, which have presumably provided decision-makers and users
of financial statements with adequate knowledge to understand IFRS.
To examine the most influential advantages/disadvantages of IFRS suitability across the
three groups, an ANOVA test was performed for each statement. The results are
summarised in Table VI. Statements 2, 3, 6, 7, 9 and 12 (of the advantages statements)
differed significantly among the three groups. Conversely, only statements 1, 5 and 6 (of the
disadvantages statements) differed significantly among the three groups. For example, all
agreed that Islamic corporate responsibility (i.e. Zakat), knowledge regarding IFRS and the
accounting programmes of local academic institutes were the most important determinants
of the suitability of adopting IFRS in emerging markets in general and Qatar and GCC in
particular. Supporting the results of the ANOVA analysis, the Kruskal–Wallis test revealed
ARJ Advantages of IFRS
32,4 No. Mean square (WG) Mean square (BG) F-statistics P-value

1 0.400 0.548 0.730 0.485

2 1.811 0.488 3.713 0.028**
3 4.678 0.620 7.546 0.001***
4 7.344 0.658 11.158 0.322
564 5 1.644 0.736 2.235 0.113
6 0.678 0.557 1.217 0.003**
7 1.144 0.695 1.648 0.093*
8 0.211 0.566 0.373 0.690
9 2.311 0.414 5.585 0.005**
10 3.033 1.015 2.988 0.056
11 25.600 0.838 30.551 0.132
12 1.544 0.746 2.071 0.000***
13 0.211 0.307 0.688 0.505
Disadvantages of IFRS
No. Mean (WG) Mean (BG) F-statistics P-value
1 3.878 0.845 4.588 0.013**
2 0.700 1.006 0.696 0.501
3 0.311 1.324 0.235 0.791
4 1.144 1.004 1.140 0.325
5 1.033 0.477 2.165 0.083*
6 8.144 1.269 6.416 0.003**
Table VI. 7 1.478 1.335 1.107 0.335
ANOVA test of 8 3.033 0.735 4.128 0.019
statement analysis Note: This table shows the results of the significance of statement analysis across the three groups. WG,
across the three within groups; BG, between groups. A significant correlation has been examined among the three groups
groups (p-value > 5%). Significant levels: * at 10%, ** at 5% and *** at 1%

that the perceptions of the three groups differed significantly for advantages statements 2, 3,
6, 7 and 12 and disadvantages statement 5 (Tables IV and V).
The differences among the study groups in their opinions about some of the research
statements, particularly the advantages of IFRS, may reflect the job nature of each group and its
relation to the application of IFRS. External auditors are in contact with different types of
corporations; financial managers are the party responsible for IFRS application and only represent
the system in their company. Academics are not in practice and advise rather than implement.
The final statement of the survey was an open-ended question asking the respondents to
optionally provide additional comments about IFRS suitability. The participants in the
financial managers group and the external auditors group added no comments, i.e. this
question remained blank. However, a number of accounting academics added great insights
regarding the value of IFRS to Qatar. One accounting academic argued that “IFRS added
value to the Qatari business environment,” and another stated that “IFRS allowed local
companies to enter foreign capital markets.” Moreover, a respondent highlighted accounting
practices in Qatar by arguing that “IFRS improves the image of Qatari accounting
practices.” A professor in accounting added a comment about the usefulness of financial
statements under IFRS, stating that “IFRS makes financial statements more relevance and
fosters trust in Qatari companies’ financial statements.” These comments suggest that IFRS
is a very suitable and valuable set of standards for the business environment in Qatar as
well as the GCC region. However, some respondents commented that they believe that
knowledge of IFRS is required to maximise its benefits. For instance, an accounting
academic argued, “A base of knowledge on IFRS would improve its beneficial effects.” Suitability of
These comments are consistent with the statistical results of this study: implementation and IFRS
applicability of IFRS require knowledge to obtain most of its benefits in the business
environment globally and in the Qatari business environment in particular. Thus, the open-
ended answers confirmed the findings from the closed-ended answers.

6. Conclusions 565
This thorough analysis supports the suitability of IFRS implementation for the business
environment of Qatar. IFRS provides many advantages to the Qatari business environment,
regulations and stock market without incurring additional major costs in the adoption
process. Moreover, this study suggests that IFRS places no major constraints on the business
environment, Islamic social responsibility among Qatari listed companies and education in
Qatar. Moreover, based on the respondents’ views, IFRS is understandable to users and
relevantly and faithfully represents the financial statements of Qatari listed companies;
however, the implementation and applicability of IFRS require knowledge to obtain most of
its benefits and advantages. The respondents indicated that academic institutions in Qatar
have provided this knowledge to the users of the financial statements. Overall, IFRS appears
to be suitable for emerging markets in general and Qatar in particular.
This study has significant implications for accounting regulators in Qatar by providing
insights into the suitability of IFRS and its impact on the enhancement and development of
the Qatari Companies Law of 2002. In addition, the results of this paper can help other
regulators in the GCC region develop accounting regulations that align their laws with the
important factors affecting the suitability of IFRS.
Certain limitations of the current study must be acknowledged. First, the Qatari/GCC culture
factor was not addressed in this study. Second, this research used a questionnaire survey to
examine the suitability of IFRS in Qatar, and there is a risk that some of the statements were not
adequately understood by the respondents. However, such misunderstandings were minimised
by providing clear and concise statements and, when necessary, clarifying the survey to some
respondents over the phone. Future research may consider an interview or a case study-based
approach to address the suitability of IFRS in emerging markets.

Notes
1. The list of sectors used in the questionnaire in the current study was adopted from the official
website of the Qatar Exchange.
2. See Section 3.2 for more details about the theoretical framework of the current study.

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Corresponding author
Ghassan H. Mardini can be contacted at: ghassan.mardini@qu.edu.qa

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