IASBB

Point of departure are the challenges to the legitimacy of the International Accounting Standards Board (IASB)  triggered by the 2008 financial crisis and the rise of new powers, as well as the ensuing institutional reforms. These institutional reforms only had a very limited impact on the day-to-day operations of the IASB, as far as the role of rising powers is concerned, as demonstrated by a study of the operational activities of the institution and its committees. This is somewhat puzzling, given that there are substantial differences between the economic requirements of companies in emerging economies and the substance of IFRS. We may explain this puzzle by pointing at the limited ability of the IASB – as a case of transnational private governance - to enforce thorough and comprehensive implementation of IFRS. Companies from emerging do not need to spend a great deal of attention on IASB deliberations, because they can mostly use loopholes in the national application of these accounting rules. At the same time, the private expert-based character of the IASB puts severe hurdles in front of rising power representatives that seek to influence the content of IFRS.

The purpose of this paper is to examine how users of company annual reports in the emerging market of Egypt view those reports, and to compare the results with the findings of Mirshekary and Saudagaran (2005) in Iran. Each study is based on a survey of different but comparable user groups in the respective country.

The data reported in this study were collected through a questionnaire survey, covering six user groups. The 72 responses received were analysed using the Kruskal-Wallis one-way ANOVA test.

The results reveal that most use annual reports for obtaining information for financial decisions. The paper also reveals that, in comparison with developed markets, Egyptian users depend more on annual report information than on advice from stockbrokers and friends or on tips and rumours. The respondents, in general, ranked the auditors’ report, notes to the financial statements and the balance sheet as the three most important parts of the annual report. However, the respondents differed in their rating of the importance of different sections of the annual report. Despite the lack of access to these reports by the general public and lack of trust in information, the majority of users view annual reports as the most important source of company information.

The results further indicate that the ranking reported by users in Egypt is notably different from that reported in Iran. This supports the research stream that aims to study accounting at single-country levels. It also sends the message that developing countries are different and face different problems from developed ones. Therefore, there might be a need to reconsider the one-size-fits-all standards that are recommended by the International Accounting Standards Board (IASB). There is an important level of adjustment which a country that imports accounting standards must make to ensure that they do not conflict with the local socioeconomic culture.