Abstract:

The objective of the article is to identify the most important institutional factors affecting the voluntary use of IFRS in selected Western European countries. In the article factors affecting the voluntary adoption of IFRS were presented, they were divided into internal and external. The following institutional factors have been empirically verified: stock exchange and banking development, government efficiency, freedom from corruption, business freedom, investment freedom, judicial independence, protection of property rights, and legal enforcement of contracts. The analysis of these factors can be regarded as an relatively innovative approach in the literature. The subject of the analysis were annual reports of listed companies belonging to the manufacturing sector in countries such as: Germany, France, UK, Italy and Finland. Enterprises were divided into those applying IFRS and applying local accounting standards. Non-parametric Mann-Whitney test was used to check the significance of differences between companies using local GAAP and IFRS. The article proved that the institutional environment of enterprises affects the voluntary IFRS application.