https://orcid.org/0000-0001-6579-1681
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ABSTRACT
This study examines the voluntary adoption of International Financial Reporting Standards (IFRS). It makes a case for the need to move beyond a purely rational behavior and structural conformity due to wider institutional pressure as well as the necessity to incorporate networks of actors, organizational diversity and practice variation into the analysis. Thus, this study aims to contribute to the broad understanding of how and why global standards like the IFRS diffuse, by examining the early and voluntary adoption of IFRS by a Portuguese company – Jerónimo Martins – that adopted IFRS voluntarily in 2000. For the purpose of this study, Actor-Network Theory (ANT), and particularly the concept of translation are useful to study the IFRS adoption as a process of actor-network building. The analysis shows that the adoption of IFRS was not a straightforward one, but rather involved several actors that faced particular challenges while responding to several interessement devices used to enroll them into the new accounting regime. The study highlights the need for further research focusing on the micro-processes surrounding IFRS adoption to better understand how accounting standards are made valuable in local and organizational contexts and the factors involved in their adoption.
Acknowledgements
The authors would like to thank to the two anonymous reviewers and the editors of the journal for their comments that played a significant role in improving the paper. The authors are also grateful to Garry Carnegie for his very constructive and helpful comments in earlier versions of the paper.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 JM holds a leading position in the food distribution, reaching the 49th position among the 250 largest world retailers (Deloitte, Touche Tohmatsu, Citation2022).
2 In Portugal, JM operates through the banners Pingo Doce (465 stores) and Recheio (42 stores), which are leaders in the supermarket and wholesale segments, respectively. JM also has a leading position in Poland, where it owns the country’s largest food retail chain: 3,250 food stores through the banner Biedronka, and 291 health and wellness stores through the banners Hebe drugstores and Apteka Na Zdrowie pharmacy. Since 2013, JM operates in Colombia, through Ara, a chain of neighbourhood food stores. This is a market in expansion to JM that in 2021 accounted 819 stores, 8,604 employees, sales of 1,102 million euros (5.3% of the Group’s total consolidated sales) and EBITDA of 47 million euros (JM, Citation2021).
3 Throughout 2001 and 2004, the water business, in-store banking, the investments in the UK, Brazil and in the hypermarkets and cash & carry chain in Poland were sold.
4 In 1999 and 1998 the international business represented 32.3% and 33% of the sales, respectively. In 2000 the international businesses of JM grew 42.6%, comparatively to 1999 (JM, Citation1999, Citation2000).
5 EBITDA represented 5.1% of the sales, less 2.7% than in 1999. The decrease was of 21.7%. The international segments of the distribution reached a negative operational income of 29,796 million euros. The EBIT decreased 64.4%, comparatively to 1999 (JM, Citation2000).
6 Until the implementation in 2005 of the Regulation 1606/2002 that made IFRS mandatory for the preparation of the consolidated accounts of EU-listed firms, Portuguese companies had to follow the Official Accounting Plan [Plano Oficial de Contabilidade], known as POC/89, and the standards issued by the Portuguese Accounting Standards Board. POC/89 was mainly based in the Fourth and Seventh Directives of the European Union (EU). Despite the adoption of IFRS, POC/89 remained compulsory, for taxation purposes, until 2009. In 2010, the code-law based Portuguese accounting system was replaced by the Sistema de Normalização Contabilística (Accounting Standardization System) that adapted IASB standards to unlisted companies. For a detailed analysis of the evolution of the Portuguese accounting system, see Caria and Rodrigues (Citation2014).
7 Investments in the international businesses were usually financed by local banks in local currencies. JM had debts in Portuguese escudos, British pounds, Brazilian reais, USA dollars and Polish zlotys (JM, Citation1999).
8 The management structure of JM includes Functional Departments, which provide support and advice to the Board of Directors, to the Managing Committee and to the Audit Committee.
9 The lack of development of the Portuguese accounting profession, and the emphasis on uniformity and legality, led the state, through the Accounting Plans, to regulate the accounting affairs of the enterprises. During the 90s, while several countries and stock exchanges in Europe allowed the use, by listed companies, of non-domestic standards, in Portugal that was not possible. Notwithstanding the influence of several IFRS in the Portuguese domestic standards, a lot of differences existed between these two sets of standards. Thus, the pervasive effects of the POC on financial accounting and reporting, led students and professionals to be taught and trained, until recently, based on the Accounting Plan. That was the case of JM’s accounting staff.
10 Briers and Chua (Citation2001, p. 241), theorized cosmopolitans as global travelers/actors ‘in the sense that they are adept at penetrating spatial and cultural boundaries’. In addition, these cosmopolitan actors ‘either work for global chains or for organisations that are linked to global chains’, which enable technologies originating from one space to be made known very quickly to actors physically located in other spaces’.