The influence of managers’ perception, steady growth, economic scale, and financial capacity on the ability to adopt international financial reporting standards of Vietnamese enterprises

Tran, Quoc Thinh; Tran, Khanh Lam Article The influence of managers’ perception, steady growth, economic scale, and financial capacity on the ability to adopt international financial reporting standards of Vietnamese enterprises Cogent Business & Management Provided in Cooperation with: Taylor & Francis Group Suggested Citation: Tran, Quoc Thinh; Tran, Khanh Lam (2024) : The influence of managers’ perception, steady growth, economic scale, and financial capacity on the ability to adopt international financial reporting standards of Vietnamese enterprises, Cogent Business & Management, ISSN 2331-1975, Taylor & Francis, Abingdon, Vol. 11, Iss. 1, pp. 1-17, https://doi.org/10.1080/23311975.2024.2391567 This Version is available at: https://hdl.handle.net/10419/326494 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ Cogent Business & Management ISSN: 2331-1975 (Online) Journal homepage: www.tandfonline.com/journals/oabm20 The influence of managers’ perception, steady growth, economic scale, and financial capacity on the ability to adopt international financial reporting standards of Vietnamese enterprises Quoc Thinh Tran & Khanh Lam Tran To cite this article: Quoc Thinh Tran & Khanh Lam Tran (2024) The influence of managers’ perception, steady growth, economic scale, and financial capacity on the ability to adopt international financial reporting standards of Vietnamese enterprises, Cogent Business & Management, 11:1, 2391567, DOI: 10.1080/23311975.2024.2391567 To link to this article: https://doi.org/10.1080/23311975.2024.2391567 © 2024 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group View supplementary material Published online: 19 Aug 2024. Submit your article to this journal Article views: 828 View related articles View Crossmark data Citing articles: 1 View citing articles Full Terms & Conditions of access and use can be found at https://www.tandfonline.com/action/journalInformation?journalCode=oabm20 ACCOUNTING, CORPORATE GOVERNANCE & BUSINESS ETHICS | RESEARCH ARTICLE Cogent Business & ManageMent 2024, VoL. 11, no. 1, 2391567 The influence of managers’ perception, steady growth, economic scale, and financial capacity on the ability to adopt international financial reporting standards of Vietnamese enterprises Quoc Thinh Tran and Khanh Lam Tran school of Finance and accounting, industrial university of Ho Chi Minh City, Ho Chi Minh City, Vietnam ABSTRACT International Financial Reporting Standards (IFRS) are global accounting standards. Many countries have gradually applied international standards to replace national accounting standards. This study aims to test the factors that affect the ability of Vietnamese enterprises to apply IFRS. We surveyed 863 managers and heads/deputies of the accounting departments of firms located in Ho Chi Minh City, Vietnam. Cross-sectional data were collected in 2022. The study used the exploratory factor analysis method and multivariate regression to test the study’s hypotheses. The results show that steady growth, economic scale, financial capacity, and managers’ perceptions positively affect the adoption of IFRS by Vietnamese enterprises. The research results emphasize that managers of Vietnamese enterprises should change their perception and have a positive mindset to start applying IFRS. The results demonstrate that businesses need to be ready and have a plan to apply IFRS successfully. It is an opportunity for Vietnamese enterprises to access financial resources for growth and development in the context of economic integration. This study also contributes empirical evidence on the factors influencing IFRS adoption in developing countries like Vietnam and it is a solid basis for Vietnamese management agencies to have appropriate policies and mechanisms for promulgating regulations. Empirical results support managers of Vietnamese enterprises in raising awareness of the benefits of applying IFRS and planning to prepare financial resources and firm scales to apply IFRS successfully. It is also a valuable document that guides and supports enterprises in applying IFRS effectively. 1. Introduction The International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) were published by The International Accounting Standards Board (IASB) to form a common language for global accounting, which is an inevitable and objective tendency in the development process of economic globalization (Nobes & Parker, 2016). Mandatory IFRS adoption has been supposed to enhance the quality of information intermediation in capital markets, and firms’ information environment leading to benefiting foreign direct investment inflows, by improving both information quality and accounting comparability (Márquez-Ramos, 2011, Gordon et al., 2012, Yip & Young, 2012, Ahmed et al., 2013, Horton et al., 2013, Christensen et al., 2015, Lungu et al., 2017, Golubeva, 2020, Siriopoulos et al., 2021). The adoption of IFRS, however, faces many challenges and difficulties in addition to opportunities and advantages, such as implementation costs, fair value accounting application, jurisdictions’ reluctance, and risk exposure issues (Ball, 2006, Morris et al., 2014, De George et al., 2016, Sharma et al., 2017, Nakamura et al., 2022). © 2024 the author(s). Published by informa uK Limited, trading as taylor & Francis group. CONTACT Khanh Lam tran [email protected] school of Finance and accounting, industrial university of Ho Chi Minh City, Ho Chi Minh City, Vietnam. supplemental data for this article can be accessed online at https://doi.org/10.1080/23311975.2024.2391567. https://doi.org/10.1080/23311975.2024.2391567 this is an open access article distributed under the terms of the Creative Commons attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. the terms on which this article has been published allow the posting of the accepted Manuscript in a repository by the author(s) or with their consent. ARTICLE HISTORY Received 29 February 2024 Revised 4 August 2024 Accepted 7 August 2024 KEYWORDS Awareness; business community; economic scale; financial capacity; planned behavior SUBJECTS Financial Accounting; Accounting; International Accounting JEL CLASSIFICATION M41; M48; F15 2Q. T. TRAN AND K. L. TRAN Some studies examined the factors affecting IFRS adoption in a particular country (Simegn, 2015, Lahmar & Asbi, 2017, Paknezhad, 2017, Al-Htaybat, 2018, Bananuka et al., 2019, Nakamura et al., 2022, Khaghaany & Jaber, 2023). Several studies have examined the perceptions of professional accountants regarding IFRS adoption in specific countries or regions (Joshi et al., 2008, Bozkurt et al., 2013, Uyar & Güngörmüş, 2013, Phan & Mascitelli, 2014, Albaskri, 2015, Joshi etal., 2016, Nurunnabi, 2017, Nurunnabi, 2018, Al-Absy & Ismail, 2019, Ortiz-Martínez etal., 2022). In addition, many studies have sought to investigate the effects IFRS adoption on various types of variables, such as financial statements, financial ratios, earnings management, stock market index, and audit fees (Iatridis & Dalla, 2011, Baig & Khan, 2016, Capkun et al., 2016, Shan & Troshani, 2016, Jermakowicz etal., 2018, Mongrut & Winkelried, 2019, Hasan & Rahman, 2020). Although the number of published papers on IFRS adoption is enormous worldwide, research on the Vietnamese market is still limited. It is since Vietnam is in the stage of voluntary IFRS adoption until 2025, leading to a lack of data to provide empirical evidence. Moreover, Vietnamese enterprises were found to be hesitant, skeptical, and ready to adopt IFRS due to issues of awareness, business environment, economic characteristics, and legal and cultural factors (Doan et al., 2020, Diep, 2021). In this context, Vietnamese firms’ readiness to adopt IFRS is a major concern. Our concern is that we hope Vietnamese enterprises to be able to attract capital in regional and international financial markets. To achieve that, one of the essential issues is that Vietnamese enterprises must improve the quality of information according to international standards. A prerequisite to improving information quality is that Vietnamese enterprises must apply IFRS. This has been demonstrated by many countries that have applied IFRS before. However, conclusions from many previous studies show that there are many factors influencing IFRS application (Gierusz et al., 2022; Khaghaany & Jaber, 2023; Paknezhad, 2017; Simegn, 2015). Therefore, Vietnamese enterprises can identify factors to predict difficult problems that can be developed to have appropriate policies and roadmaps. It is the main motivation for us to conduct this research. The purpose of the research is to find factors affecting the adoption of IFRS by Vietnamese enterprises. Based on survey questionnaire responses from managers and heads/deputies of the accounting department, we attempt to provide more empirical evidence on the determinants affecting enterprises’ IFRS adoption ability in Vietnam. We have used the theory of planned behavior and the new institutional sociology to explain issues related to managers’ awareness of the intention to apply IFRS. The pressures of enterprises on financial ability and capacity to ensure resources and issues of synchronizing qualifications and expertise imitating other enterprises to apply IFRS which is also explained by those underlying theories. In agreement with Boumediene etal. (2016), Al-Absy and Ismail (2019), Diep (2021), and Nguyen et al. (2023), we discovered that managers’ perceptions, steady growth, economic scale, and financial capacity constitute major determinants for adopting the IAS in Vietnam. However, in contrast with the findings of Nguyen etal. (2023), we note that factors such as policy mechanisms, and professional careers have not significantly affected the decision to adopt IFRS. Furthermore, we found no significant impact of the business community on the adoption procedure. Our results reinforce the conclusion that managers should change their perceptions and have a positive mindset to innovate and approach IFRS adoption. We also highlight that Vietnamese enterprises should consider listing abroad as a channel for attracting optimal capital for expansion. It is essential to enhance the scale of enterprises and increase financial capacity to overcome challenges and barriers to IFRS adoption in Vietnam. These are useful documents for managers of Vietnamese enterprises to have appropriate roadmaps and fully prepare for IFRS application. It is also an experience for Vietnamese management agencies to have policies and mechanisms to support enterprises to successfully implement IFRS. 2. Background International Financial Reporting Standards support businesses across countries to improve the information quality of financial reports. This is the foundation for information to be transparent, comparable, and ensure relevant. It is also the basis for improving information reliability for relevant parties. Applying IFRS also faces difficulties and challenges due to many influencing factors. It is of even greater concern to developing countries like Vietnam because of the awareness of managers, the economic capacity, and the adaptability of the business community. Many studies are interested in applying IFRS COGENT BUSINESS & MANAGEMENT 3 in developed countries, but recently some topics have focused on the issues of developing countries (Al-Htaybat, 2018; Khaghaany & Jaber, 2023). Developing countries are in the process of preparing to apply IFRS like Vietnam. This study addresses issues related to the IFRS application process in developing countries, specifically in Vietnam. The issue of discovering factors affecting IFRS adoption has received much attention in developed countries, including both internal and external factors (Al-Absy & Ismail, 2019; Lahmar & Asbi, 2017). However, different cultural, legal, economic, and political environmental issues have created dissimilar factors between countries (Gierusz et al., 2022; Nobes & Parker, 2016; Yip & Young, 2012). Developing countries face challenges in converting their national accounting standards to IFRS. In particular, economic problems are always difficult because the financial resources of enterprises in developing countries are not strong enough to stand firmly in the global market (Golubeva, 2020; Siriopoulos etal., 2021). Enterprises in developing countries face many obstacles due to competitive pressure to rise to the market. Attracting capital is always a difficult problem for enterprises in developing countries, typically like Vietnam. The capacity and expertise of managers in these countries are also obstacles because of accessing new and progressive knowledge sources to improve and manage businesses effectively (Nurunnabi, 2018; Ortiz-Martínez et al., 2022; Rosmianingrum et al., 2023). To pursue benefits from applying IFRS, enterprises are always aware of the importance of converting the national standards system. Most countries are encouraged to apply IFRS. It is the trend toward regional integration and globalization (Lahmar & Asbi, 2017; Mongrut & Winkelried, 2019). This is also the strategy that Vietnamese enterprises always pursue for their mission to enhance economic development. This research comes from the context of Vietnamese enterprises preparing to fully apply IAS/IFRS. This shows that state agencies and the Vietnamese business community are very interested in relevant factors affecting the application of IAS/IFRS in Vietnam. Empirical evidence in identifying factors affecting IFRS application in Vietnam’s economic, legal, and cultural conditions is a useful experience. It is a solid foundation for Vietnamese enterprises to prepare appropriately for the IFRS application roadmap soon. 3.Theoretical literature review In the context of globalization, countries are gradually applying IFRS. IFRS is an international accounting standards system for preparing and presenting financial reports for enterprises. IFRS is the recording, evaluation, presentation, and disclosure of information to ensure improved information quality. IFRS ensures consistency, transparency, relevance, and comparability for stakeholders to ensure the reliability of information in business decisions. IFRS is becoming a common language globally regarding financial reporting information (IFRS Foundation, 2024). Applying IFRS is understood as the development process towards a system of high-quality global accounting standards. Christensen et al. (2015) commented that IFRS sets high-quality standards to improve international comparison of financial information and reduce costs for users, investors, and auditors to develop the market. global capital. Yip and Young (2012) believed that applying IFRS aims to increase the comparability of information on financial reports and aims for a set of higher quality standards. Nobes and Parker (2016) evaluated the application of IFRS as aiming at a single point to achieve consensus. The consensus on the viewpoint to apply IFRS is to reach a system of high-quality financial reporting standards to meet the information needs for decision-making in the capital market and other requirements of the economy (Hallberg & Persson, 2011, Lungu et al., 2017, Golubeva, 2020). Countries adopting IFRS increased over time. European countries have adopted IFRSs although there has been a time lag in the adoption of some recent IFRSs (Christensen et al., 2015). Australia and New Zealand have adopted accounting standards equivalent to IFRS and ensure entities have IFRS-compliant financial statements (Al-Htaybat, 2018). Canada has fully adopted IFRS. These Chinese standards are essentially equivalent to IFRS, except for certain modifications in some standards. Singapore has adopted the Singapore equivalent of IFRS but this country has made changes to the recognition and measurement principles in some IFRSs in some standards (Joshi etal., 2016). The replacement of national accounting standards to apply IFRS also stems from many factors including internal (steady growth, economic scale, financial capacity, business communities, managers’ perception, professional career) and external factors (policy mechanisms). Therefore, countries must consider influencing factors to make flexible and 4Q. T. TRAN AND K. L. TRAN appropriate adjustments to apply IFRS smoothly (Al-Absy & Ismail, 2019; Boumediene et al., 2016; Rosmianingrum et al., 2023; Sharif, 2010; Simegn, 2015). The theory of planned behavior (TPB) indicates a person’s willingness to perform a behavior. The intention to perform a behavior is more likely to increase the likelihood of the behavior being performed (Ajzen, 1991). Planned behavior clarifies human behavior, not just prediction, and deals with factors that influence behavioral intention, such as attitude towards behavior, subjective norms for behavior, and perceived control. This theory also explains professional careers, policy mechanisms, and the managers’ perception to enhance their ability to adopt IFRS (Simegn, 2015). Attitudes are determined by individuals’ beliefs and judgments about the results of behavior and are a significant factor influencing the intention of countries to adopt IFRS (Djatej et al., 2012; Phan et al., 2018). The new institutional sociology theory holds that enterprises become stable and homogeneous after implementing institutions. Enterprises are institutionalized by surrounding organizations to ensure stable maintenance and development. Homogenization is the process by which enterprises should change to resemble other organizations in the same industry and scale of operation (Dowling & Pfeffer, 1975, March & Olsen, 1976, Godfrey et al., 2010, Powell & DiMaggio, 2012). This theory is concerned with the possibility of generating pressures, such as coercion and imitation, to adopt IFRS. Enterprises in the same field of activity act similarly and imitate each other. In the context of integration and to ensure steady growth, economic scale, and financial capacity, enterprises tend to adopt IFRS, and other enterprises also need to adopt it (Al-Absy & Ismail, 2019; Sharif, 2010). The business community also has a significant influence on enterprises’ choices to adopt IFRS of enterprises (Albaskri, 2015). Coercive pressure enforces compliance with internationally recognized regulations (Lahmar & Asbi, 2017; Simegn, 2015). 4. Empirical literature review and hypotheses development 4.1. Empirical literature review Studies on the factors affecting IFRS adoption are interesting to researchers in many ways. Sharif (2010) examined the factors affecting IAS adoption in Iraq. The authors used survey questionnaires from 50 listed companies. The study analyzed the data according to the Likert 5 scale and the ordinary least squares (OLS) method was used to test the hypothesis. The results show that the capital market, education level, professional organization, and company size influence enterprises’ adoption of IAS. Hallberg and Persson (2011) tested the factors affecting the voluntary adoption of IAS by 84 listed companies in Sweden. The authors demonstrate that the voluntary decision to adopt IAS is related to economic growth by listing abroad, using the audit and industry types of companies. Djatej etal. (2012) examined accounting practitioners’ behavioral attributes toward IFRS adoption. The research sample included 138 accounting professionals from multinational companies in the US. This study used survey questionnaires with a Likert scale of 7, and exploratory factor analysis was performed using OLS. The results indicate that subjective norms and cognitive control significantly influence early IFRS adoption. Moqbel et al. (2013) test the perceptions of familiarity, risk, and usefulness of IFRS. The questionnaire was designed using a 5-point Likert scale. The sample included 84 American accountants, and the data were processed using PLS-SEM. These findings suggest that risk perception is a barrier to the adoption of IFRS. Tarca et al. (2013) considered the effect of a firm’s financial resources on IFRS use. The authors surveyed 408 listed German companies. OLS was used to test the hypotheses. The results confirm that companies with financing from foreign ownership are more likely to adopt IFRS. In the face of integration pressure, countries worldwide enhance IFRS adoption, suggesting that researchers continue to pay attention to this topic. Specifically, Simegn (2015) identifies the factors affecting firms’ adoption of IFRS in Ethiopia. Using the Likert 5 scale for a sample of 70 accounting experts, the author uses the OLS method to test the hypotheses. This study explores how the qualifications of practitioners and the legal system, economic development, and capital markets affect their intention to adopt IFRS. Albaskri (2015) examines accountants’perceptions affecting IFRS adoption in Libya such as government policies, capital markets, educational attainment, and professional organizations. The author uses Likert 5 scale questionnaires for a sample of 288 accountants of companies. The study concludes that professional organizations and government policies positively impact the COGENT BUSINESS & MANAGEMENT 5 implications for IFRS adoption. Boumediene et al. (2016) consider obstacles to the adoption of IAS/IFRS in Tunisia. The authors surveyed the opinions of 71 certified public accountants in Tunisia through questionnaires designed on a five-point Likert 5 scale. The results confirm that the factors that hinder the adoption of IAS/IFRS include the tax system, awareness, attitudes of managers, and financial capacity. Lahmar and Asbi (2017) examined the factors affecting the adoption of IFRS by enterprises in Libya. The study collects data using a Likert 5 scale questionnaire and receives a final sample that includes 274 experts in the field of accounting. The outcomes suggest that the influencing factors include the economy, the tax system, the legal system, culture, and language. Paknezhad (2017) identifies the factors affecting IAS/IFRS adoption in Iran. The survey sample consisted of 176 participants with accounting knowledge and the questionnaire was designed using a five-point Likert 5 scale. The results show that factors such as economic growth, education level, legal system, and investment in foreign countries significantly impact the adoption of IAS/IFRS. Recently, Al-Absy and Ismail (2019) investigated accountants’ perceptions of the factors affecting the adoption of IAS/IFRS in Yemen. The authors use a 5-point Likert questionnaire to survey 41 accountants. The results verify that international integration, government policy, capital markets, economic growth, professional organization, education level of accountants, size of firms, and financial capacity significantly influence the adoption of IAS/IFRS. Bananuka et al. (2019) review the influence of factors on IAS/IFRS adoption in Ugandans using a 5-point Likert scale questionnaire. Through a final sample of 67 microfinance institutions that are members of the Association of Microfinance Institutions of Uganda, this study demonstrates that the board of directors’ effectiveness and intellectual capital positively and significantly contribute to IFRS adoption. Managerial attitudes are positively connected with IFRS adoption, but their explanatory competence is subsumed by intellectual capital. Nakamura et al. (2022) investigate the factors affecting preparers’ attitudes towards IFRS by conducting an original survey of Japanese listed firms. This study uses an exploratory factor analysis with a Likert scale of 7 on a surveyed sample that includes chief financial officers from 26 listed Japanese companies. The results show that principle-based accounting represented by IFRS leads some preparers to consider IFRS adoption a good opportunity to reorient their business, which contributes more firmly to preparers’ attitudes towards IFRS than the commonly assumed advantages of IFRS adoption. Khaghaany and Jaber (2023) studied the impact of factors on the IAS/IFRS adoption of 18 banks in Iraq from 2011 to 2020 by applying ordinary least squares to test the hypotheses. The results indicate changes in cash flows and deviations in accounting estimates affect IAS/ IFRS adoption. Several studies have been conducted on IFRS adoption in Vietnam. Doan et al. (2020) examine the factors affecting IFRS adoption from the perspective of auditors and managers. The study used a regression test with a Likert scale of 5. The results verify that legality, business characteristics, employee qualifications, and professional associations influence enterprises’ adoption of IFRS. Diep (2021) explored 489 listed companies in Vietnam to consider IFRS adoption. The study used a 5-point Likert scale and OLS to test the hypotheses. The findings show that integration, company size, legality, professional organization, awareness of managers, accounting capacity, and cost to implement positively influence IFRS adoption. Nguyen et al. (2023) apply qualitative combined with quantitative and structural equation modeling (SEM) to examine the causal relationship between influencing factors and enterprises’ willingness to apply IFRS voluntarily. This study confirms that compliance with accounting regulations and principles, qualifications and experience of accountants, accounting regimes and government circulars, capabilities, and the benefits of IFRS adoption positively impact the application of IFRS. In addition, Ta et al. (2021) and Nguyen (2022) test the factors of financial indicators affecting the adoption of IFRS in listed companies in Vietnam and find that firm size, total debt-to-equity ratio, profitability, audit quality, foreign investment, and financial institution category have significant impacts. Following an extensive review of the literature, we find that there is potential for more research on the applicability of IFRS by firms in Vietnam to provide more empirical evidence on this topic. Studies on listed companies and medium-sized enterprises have not been examined from different comprehensive perspectives in Vietnamese enterprises. Previous studies have been interested in many issues regarding culture, staff qualifications, and professional associations. This study focuses on managers’ perceptions, integration, economic scale, financial capacity, and the business community, which relate to the Vietnamese context. Moreover, the 7-point Likert scale set of variables in the study ensures the latest 6Q. T. TRAN AND K. L. TRAN accuracy, and the survey questionnaire is compiled based on experts who are scientists and practitioners who have researched IFRS for a long time. Based on the synthesis of previous studies and the saturation of experts’ opinions, we propose hypotheses for the research model related to steady growth, economic scale, financial capacity, policy mechanisms, managers’ perceptions, the business community, and professional careers. 4.2. Hypotheses development Enterprises tend to maintain stable growth due to institutional assimilation within businesses. Stability is the foundation for maintaining continuous operation and perpetual growth. Enterprises choose to apply IFRS as a condition to fit the general context of the community and IFRS adoption is a decisive condition (Paknezhad, 2017; Simegn, 2015). The higher the level of economic integration, the more enterprises tend to adopt IFRS to attract investment capital for development (Diep, 2021; Lahmar & Asbi, 2017). Globalization in economic activities has prompted all economic transactions to be recorded in compliance with IFRS. Information from transparent and comparable financial statements forms the basis for enterprises to create stability for growth (Al-Absy & Ismail, 2019; Nakamura et al., 2022). Vietnamese enterprises need to attract investment to mobilize resources for economic growth. Applying IFRS is an opportunity for Vietnamese enterprises to improve information quality and is a condition for stable growth. Therefore, we propose the following hypothesis: Hypothesis 1. Steady growth influences the ability of Vietnamese enterprises to adopt IFRS. Enterprises with large economies of scale are often diverse in the business field. Institutional theory has explained the pressures on the business scale, so it is the driving force for businesses to increase scale to ensure general development. To maintain increased economic scale, applying IFRS is an advantage to ensure development in the general regime when all enterprises implement IFRS. Complex economic transactions require information processing to be standardized according to IFRS (Hallberg & Persson, 2011; Nakamura et al., 2022). Large enterprises have many financial resources to accelerate to implementation IFRS adoption (Al-Absy & Ismail, 2019; Diep, 2021; Sharif, 2010). This supports the information quality of Vietnamese enterprises for stakeholders. Transparency and relevance of information in IFRS support Vietnamese enterprises to increase investor confidence. Based on the results of previous studies, the following hypothesis is proposed: Hypothesis 2. The economic scale influences the ability of Vietnamese enterprises to adopt IFRS. Enterprises must carefully consider their financial capacity to adopt IFRS. Financial capacity is always a challenge for businesses. Institutional theory has explained the pressures on financial resources in the context of competition to maintain effective resources for development. It is one of the pressures on businesses when applying IFRS. This is also appropriate when businesses must pay attention to their financial capacity to prepare for their IFRS implementation plan. The costs of IFRS adoption are expensive because of the complex nature of this standard system. The procedures of converting to IFRS incur many expenditures, such as personnel training, adjusting the accounting software system, buying new accounting documents, and consulting services (Al-Absy & Ismail, 2019; Boumediene et al., 2016). Vietnamese enterprises mostly have moderate resources. Therefore, implementation costs are a challenge for Vietnamese enterprises in applying IFRS. Accordingly, the model’s hypothesis is as follows: Hypothesis 3. Financial capacity influences the ability of Vietnamese enterprises to adopt IFRS. Appropriate policies ensure the operation of the enterprises. Behavioral theory has been explained in the implementation of mechanisms and policies. Policies demonstrate the will to take action in applying IFRS. However, some mechanisms are lame and inconsistent, creating difficulties in adopting such regulations (Al-Absy & Ismail, 2019; Simegn, 2015). The tax system is an obstacle to IFRS adoption when accounting and taxation are closely linked (Lahmar & Asbi, 2017). Tax-driven accounting systems impede IFRS adoption. Inconsistent regulations between taxes and accounting confuse enterprises and reduce the comparison of financial information between enterprises (Boumediene etal., 2016; Paknezhad, 2017). COGENT BUSINESS & MANAGEMENT 7 Vietnam is gradually standardizing regulations according to international standards. Mechanism and policy issues are barriers that affect Vietnamese enterprises in applying IFRS. Similar to previous studies, this study proposes the following hypotheses: Hypothesis 4. Policy mechanisms influence the ability of Vietnamese enterprises to adopt IFRS. Managers who pioneer innovation are agents of change in an organization. Managers’ awareness is clearly shown in behavioral theory. Doubt or uncertainty is always the hesitation of managers in applying IFRS. Managers’ perceptions make important changes to IFRS adoption (Moqbel etal., 2013). Managers’ perceptions affect the information quality of enterprises’ financial statements in enterprises (Djatej etal., 2012). Accounting information is a management tool for checking and monitoring the activities and operations of an enterprise. Managers’ perceptions play an important role in facilitating enterprises’s adoption of IFRS by enterprises (Bananuka et al., 2019). Additionally, managers’ perceptions positively influence their choice of accounting policies in the preparation of financial statements. Management with a good sense of law compliance to ensure faithful accounting information will promote IFRS adoption (Boumediene etal., 2016; Diep, 2021). The cautious nature is a cultural characteristic of Vietnamese enterprises. The concern and skepticism of Vietnamese managers in applying IFRS are also obvious. Therefore, we propose the following hypothesis that: Hypothesis 5. Managers’ perception influences the ability of Vietnamese enterprises to adopt IFRS. The influence of the business community is reflected in the growth of professional associations and organizations that include both financial and management accounting. Behavioral theory has interpreted the views of some individuals in the organization. The business community is a gathering of business administrators. The views or policies of the business community have influenced managers’ intentions in applying IFRS. The business community plays a dominant role in decisions regarding IFRS adoption and establishment of an IFRS (Al-Absy & Ismail, 2019; Sharif, 2010). In addition, the development of business community organizations contributes to promoting the adoption of IFRS in enterprises (Albaskri, 2015). Vietnam’s business community has an essential role to play alongside managers. The business community’s policies and orientations influence the intention of Vietnamese enterprises to apply IFRS. Based on this, we propose the following hypothesis: Hypothesis 6. The business community influences the ability of Vietnamese enterprises to adopt IFRS. IFRS adoption depends markedly on the qualifications and knowledge of the accountant. Professional expertise often has opinions and perspectives that serve as a basis for consulting managers’ policies. Careers are also influenced by organizational behaviors. The intentions or consultations of professional organizations change the minds of managers in applying IFRS. Countries with well-trained accounting practitioners ensure that adopting the principles and methods of accounting (Al-Absy & Ismail, 2019). Simegn (2015) indicates a relationship between professional career characteristics and IFRS adoption. This reflects the important role of a professional career in complying with IFRS. Vietnamese professional organizations have supported enterprises in their expertise. This reflects the important role in the profession’s orientation towards IFRS compliance of Vietnamese enterprises. Consequently, the last hypothesis is proposed as follows: Hypothesis 7. A professional career influences the ability of Vietnamese enterprises to adopt IFRS. From the above hypotheses, we develop the following research model: ADOPTION GROWTH SCALE CAPACITY POLICY PER = +× + × + × + × × ββ β β β β 01 2 3 4 5 CCEPTION COMMUNITY PROFESSION+× +× + β βε 67 where the dependent variable (ADOPTION) is the ability of Vietnamese enterprises to adopt IFRS, The independent variables include steady growth (GROWTH), economic scale (SCALE), financial capacity (CAPACITY), policy mechanisms (POLICY), managers’ perceptions (PERCEPTION), business communities (COMMUNITY), and professional careers (PROFESSION). 14 Q. T. TRAN AND K. L. TRAN Albaskri, I. (2015). The perception of accountants on IFRS adoption: Evidence from Libya. [Master’s thesis]. University Utara Malaysia. Al-Htaybat, K. (2018). IFRS adoption in emerging markets: The case of Jordan. Australian Accounting Review, 28(1), 28–47. https://doi.org/10.1111/auar.12186 Baig, M., & Khan, S. A. (2016). Impact of IFRS on earnings management: Comparison of pre-post IFRS era in Pakistan. 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