Abstract: One of the most important factors on attracting foreign investors to invest on Tehran Stock Exchange is to have transparent accounting rules and regulations. When there are some consistency between national accounting standards and international accounting standards, we may, at least, expect foreign investors to have better understanding on financial statements. In 2006, there were some changes on Iranian national accounting standards in an attempt to make them closer to international accounting standards. In this study, we select the information of 153 firms five years before and after this regulation and study the effect of convergence from national accounting standards to international accounting standards on foreign direct investment. Using some statistical tests, the study has determined that there was no meaningful relationship between foreign direct investment before and after change on accounting standards. In addition, there was no difference on the information quality before and after change on accounting standards. However, there was some meaningful relationship between the information quality and foreign direct investment.
How to cite this paper
Farazandehnia, A & Baghani, A. (2015). Effects of national accounting standards convergence to international accounting standards on foreign direct investment.Management Science Letters , 5(9), 827-832.
Benston, G. J. (1980). The establishment and enforcement of accounting standards: methods, benefits and costs. Accounting and Business Research,11(41), 51-60.
Buckley, P. J., Clegg, L. J., Cross, A. R., Liu, X., Voss, H., & Zheng, P. (2007). The determinants of Chinese outward foreign direct investment. Journal of international business studies, 38(4), 499-518.
Chen, C. J., Ding, Y., & Xu, B. (2014a). Convergence of accounting standards and foreign direct investment. The International Journal of Accounting, 49(1), 53-86.
Chen, C.J.P., Ding, Y., & Xu, B. (2014b). Response to discussant “Convergence of accounting Standards and foreign direct investment”. The International Journal of Accounting, 49(1), 97-100.
Cheng, L. K., & Kwan, Y. K. (2000). What are the determinants of the location of foreign direct investment? The Chinese experience. Journal of International Economics, 51(2), 379-400.
Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review, 77(s-1), 35-59.
De Mello, L. R. (1999). Foreign direct investment-led growth: evidence from time series and panel data. Oxford Economic Papers, 51(1), 133-151.
Dunning, J., & Narula, R. (2003). Foreign Direct Investment and Governments: Catalysts for Economic Restructuring. Routledge.
Graham, E. M., & Krugman, P. (1995). Foreign direct investment in the United States.
Lin, H. L., Hsiao, Y. C., & Lin, E. S. (2015). The choice between standard and non-standard FDI production strategies for Taiwanese multinationals. Research Policy, 44(1), 283-293.
Nurunnabi, M. (2015). The impact of cultural factors on the implementation of global accounting standards (IFRS) in a developing country. Advances in Accounting, 31(1), 136-149.
Zeghal, D., & Mhedhbi, K. (2006). An analysis of the factors affecting the adoption of international accounting standards by developing countries. The International Journal of Accounting, 41(4), 373-386.
Zehri, F., & Chouaibi, J. (2013). Adoption determinants of the International Accounting Standards IAS/IFRS by the developing countries. Journal of Economics, Finance and Administrative Science, 18(35), 56-62.