7.2 Perceptions of key actors on the use of financial reporting information and the impact
7.2.1 Perspectives on the internationalisation of accounting standards
Before discussing in detail the main themes arising from the interviews with local actors regarding their experience with IFRSs, it is important to highlight the context of the discussion in which their perceptions developed. Although the interviewees were explicitly asked about their motivations for adopting IFRSs, as well as the process and impact of the new set of standards, most of the interviewees did not discuss the adoption of IFRSs in isolation. In many cases the discussions turned to the forces of globalisation and the economic necessity of a single market. More specifically, IFRSs themselves appeared to be understood within the context of wider economic developments, thereby illustrating a particular way of conceiving the world. For example, the views on the perceived benefits of the adoption of IFRSs were influenced indirectly by overall views and attitudes towards the international economic integration of markets and accounting regulations. The discussion on the merits and the rationale behind the project of financial reporting harmonisation was set in the context of the EU integration and developments as expressed in the EU Directives, and was rationalised as the expected outcome of the economic globalisation process.
In terms of the general attitude of the individuals interviewed, it could be argued that a positive stance towards the harmonisation process and the adoption of IFRSs was taken. The arguments put forward in support of the rise of IFRSs were associated with the development and diffusion of a capital market culture, the rise of supranational government institutions and the internationalisation of companies’ operations. The underlying assumption, sometimes explicitly expressed, was that the adoption of IFRSs is a component of a broad neo-liberal
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agenda consistent with the contention that privatisation and market competition leads to a more efficient and fair allocation of economic resources. State intervention is considered an obstacle to the efficient operations of free markets:
‘Unfortunately, in Greece the majority of people adhere to ‘left’ ideologies and beliefs; these are rather dated and do not encourage the modernisation of the economy and society. We do not have a society of equal opportunities, actual free markets, but instead there are despicable state interventions everywhere that lead to an unproductive economy and the distortion of society... We were unfortunate, because when Greece became a member of the EU, we did not use the opportunity to claim a share in the production process and the market nor did we acquire technical knowledge along with the developed EU countries. Instead, the state restricted Greek entrepreneurship in legal terms. Companies decided to invest in third- world countries, in the Balkans’. [MA2]
‘State intervention should be limited to capital circulation in order to avoid economic crises caused by the lawlessness of the banks. States should stay away from production processes.’
[AUD2]
‘The economy and the accounting profession should be based on private initiatives, all institutions and organisations that were run by the state were a disaster; even though private institutions did not prove to be better in the end, we need to preserve the idea of privatisation and try to improve on weak situations... We cannot go back to when companies were bribing public services...’ [FA3]
These above views echo the domestic discourse on modernisation that Caramanis (2005) observed to be based on Diamadouros’ (1993) analysis, when he examined the intra- professional conflict over the jurisdiction of statutory auditing in Greece in the context of the socio-economic and political changes that took place in the country. According to this analysis, the contemporary Greek socio-political system is historically polarised between perspectives; a modernising tradition promoting rationalisation along pro-liberal, western- looking and capitalist lines, and an underdog tradition, which is an anti-reform culture, pro- statist and pronounces scepticism towards capitalist mechanisms. Although this categorisation should not be used simplistically and deterministically; by overlooking how these traditions pervade society and develop across class lines, some of the interviewees’
reject the clientistic and populist traits within the current political system (Mouzelis, 1986),
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commenting that it is responsible for the backwardness and inefficiency of the Greek economy and negatively impacts on society.
On the other hand, modernisation is conflated by the integration of Greece into the international political and economic system, which was invigorated by the country’s accession to the EU. Modernisation, or so-called Europeanisation, is perceived as favouring market mechanisms that foster international competition, benefiting the growth of economic and entrepreneurial initiatives. Modernisation still exists as an argument, although it seems to signal a departure from the clientistic tradition and the populist politics of the 1980s. Pre- IFRSs’ accounting practices appear to be stigmatised by this clientistic culture due to the pre- eminence of national regulators over the calculation of taxes; meanwhile IFRSs symbolise a positive modernisation step, as part of the economic restructuring imported into Greece in the 1990s. As discussed in previous chapters, the modernisation project is simply reliant on economic, social and political reforms that have to embrace privatisation, liberalisation of the labour market and changes in the pension system (Featherstone, 2005). Governments and sections of the Greek ruling classes used modernisation-related arguments to transform Greece into a neo-liberal experiment, based on an instrumental belief in the importance of EU membership. Thus, Greece’s EU-level commitments encouraged the prevalence of a neo- liberal agenda in the pursuit of globalisation. This point was generalised for the use of IFRSs by an interviewee who maintained that:
‘IFRSs are more legitimate; they contribute to the modernisation of a company and help in its extroversion and its globalisation.’ [CM1]
Other interviewees take a more passive stance towards the internationalisation of financial reporting process. For them economic integration was a positive step towards the growth of the economy, yet Greece is regarded as a weak player in the European and international arena, one that must follow political and economic developments and accept the way things are done. This approach resembles a discussion on the role of Greece and its dependency on other advanced economies that cannot be avoided or defied easily.
‘We are part of the EU, this cannot change - we cannot exit from the EU. We are required to adopt IFRSs, we cannot avoid it, even though the country’s environment is unfavourable.
What we can do is to make an effort to comprehend the standards and advance our technical level and apply them in this particular context...’ [AUD7]
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The interviewees’ reactions to the internationalisation of accounting standards appear to be influenced and shaped by the debates that take place within their own organisations.
Although these views are expressed by a specific and narrow group of people, who do not represent the wider society and groups which are affected by corporations’ actions and their accountability, this group does include the most knowledgeable and sophisticated users of financial reporting. Their stance will determine the future application of IFRSs in the Greek context. Accounting regulation changes impact on the wider national economy and entrepreneurship, as financial accounting is a fundamental source of information that establishes the basis on which economic policies are to be structured and restructured.