The Clevo case: A timeline of IFRS “Reluctance”

• Published date: 01 October 2021
• Author: Yu‐Lin Hsu,Gavin C. Reid
• Date: 01 October 2021
• DOI: http://doi.org/10.1002/jcaf.22510

Received:  April Accepted:  July 

DOI: ./jcaf.

RESEARCH ARTICLE

The Clevo case: A timeline of IFRS “Reluctance”

Yu-Lin Hsu1Gavin C. Reid2,3

Department of Accounting and Finance,

University of Strathclyde, Glasgow, UK

School of Economics and Finance,

University of St Andrews, St Andrews,

UK

Centre for Business Research at

Cambridge Judge Business School,

University of Cambridge, Cambridge, UK

Correspondence

Yu-LinHsu, Department of Accounting

andFinance, University of Strathclyde,

Level, Stenhouse Wing, University of

Strathclyde, Cathedral Street, Glasgow,

GQU, UK.

Email:yulin.hsu@strath.ac.uk

Abstract

There is an ongoing policy debate over whether the adoption of IFRS should be

mandatory.All Taiwanese listed companies had to adopt IFRS from , but they

could choose to adopt earlier in . Surprisingly, given cross-national compar-

isons, not one Taiwanese company adopted early. This is an extreme example

of policy “reluctance.” We explore this unique setting, by analyzing a leading

reluctant Taiwanese company, Clevo. It was widely known as a potential early

adopter but withdrew at the last minute. This paper illustrates how a firm which

perceived net benefits would be incentivized to adopt IFRS early, but then how

uncertainties in regulations could stall such intentions. Through discussing how

the accounting regulators responded to this firm’s actions (and vice versa), this

paper helps us to understand better the prerequisites for effective policy design

and corporate decision-making in the context of IFRS adoption and implemen-

tation. This paper, using a qualitative research method, will also add to exiting

IFRS literature which mainly focuses on quantitative analysis.

KEYWORDS

fair value, IFRS, investment properties, policy reluctance, regulations, regulatory change

1 INTRODUCTION

The International Accounting Standards Board (IASB) was

first established in , with the aim of worldwide harmo-

nization of accounting terminology, professional practice,

and financial statement analysis. Its mission was to foster

transparency,accountability, and efficiency across all mar-

kets in all nations by the use of new International Financial

Reporting Standards (IFRS) (Pacter,). Today,IFRS has

been formally established in over  jurisdictions, with

many more allowing their partial use. The implementation

of IFRS occurs either at an exact date, or within a “win-

dow” of dates. The latter allows voluntary early adoption

(Soderstrom & Sun, ).

This paper investigates how this voluntary adoption

period can create policy concerns that ultimately impede

the introduction of IFRS, using the case study of the

Taiwanese-originated Clevo Company (hereinafter simply

“Clevo”). Clevo was selected because it wasinitially a high-

profile IFRS early adopter, and attracted much attention,

at the time, from the media, practitioners and account-

ing regulators (Li & Chang, ). However, in the end,

all Taiwanese companies, including Clevo, chose not to

adopt IFRS early.Over a decade after IFRS was introduced,

Christensen () wondered why adoption of IFRS was

not always attractive,as the academic arguments tended to

favor adoption. This paper explores in micro-detail why, in

practice, early adoption of IFRS proved to be unattractive

in Taiwan. Our qualitative evidence will add to the exist-

ing literature which focuses on quantitative analysis, and

this paper will contribute to the ongoing discussion about

the worldwide non-adoption of IFRS (Christensen, ;

Pownall & Wieczynska, ).

This paper is also relevant to understanding the con-

tinued appetite for adopting IFRS in neighboring ASEAN

countries (Joshi et al., ). This has spread to countries

such as Hong Kong, Singapore, Malaysia, and South Korea

in recent year (Kwon et al., ). It is even in the sightline

J Corp Account Finance. ;:–. ©  Wiley PeriodicalsLLC65wileyonlinelibrary.com/journal/jcaf