This article leans on the neo-institutional theory of organizations. We argue that institutional theory provides a better understanding than agency theory of the adoption of internationally recognized standards. These internationally recognized standards are US GAAP promulgated by Financial Accounting Standard Board (FASB) and IAS standards promulgated by International Accounting Standard Committee (IASC). Indeed, institutional theory helped to explain the emergence of different accounting forms. (Carpenter & Feroz, 1992; Covalesky & Dirsmith, 1988; Fogarty, 1992; Mézias, 1991; 1995). These studies cover the entire domain of accounting: the accounting companies, the professionals and standards setters, and management control.

In a first theoretical part in which the limits of agency theory to explain accounting change are put in evidence. Also, the explanatory propositions of adoption deviated from institutional theory are described (loose coupling, coercion, transmission of norms and imitation). The second, empirical part of the paper consists of three case studies. They allow clarifying the relative part of the three types of isomorphisms from the institutional theory.

The neo-institutional theory of organizations: an alternative to agency theory

In the first part of this paper, We elaborate propositions to enrich the explanations of the adoption of internationally recognized accounting standards. For that we put into evidence the limits of agency theory to explain accounting changes, we use the neo-institutional theory of organizations (NIT) and the findings obtained stemming from the accounting literature to

Agency theory: its contributions and limites for the study of accounting standards

Generally, the studies on Generally Accepted Accounting Principle's (GAAP) adoption fall within the framework of agency theory in the lineage of Jensen and Mekling's (1976) works.

According to agency theory, organizations are analyzed in term of conflict of interest between principal and agent (Jensen & Meckling, 1976). The principals are the owners of the assets of the company and delegate the control of organizations to the managers who are their agents (Fama & Jensen, 1983). The managers use discretionary margins to maximize their interest to the detriment of the interests of the principal, what is called residual losses (Jensen & Meckling, p. 308). Such losses are to a certain extent avoided by means of control mechanism such as accounting standards and audit (Watts, 1977).

Contractual efficiency and adoption of standards in consolidation

The studies which concern GAAP's adoptions show that managers make efficient accounting choices because of the existence of contracts which integrate their opportunist behavior (Zimmer, 1986 ; Wittread, 1987 ; Mian & Smith, on 1990 ; Whittred & Zimmer, 1994). Most of these studies concern the determination of a set of accepted accounting procedures - that is the GAAP - and explain them by the existence of contractual constraints. These studies insist on the binding role of contracts between the firm and its partners for the definition of accounting standards used in the accounting policy. It is not any more the contractual constraints which determine the accounting procedures but the nature of the activity which leads simultaneously to a series of contractual constraints and accounting procedures. The choice of a bookkeeping system is not explained by the opportunism ex post of the administrators but by a control by means of contracts ex ante, i.e. potential transfers of wealth. The GAAP is one of these contracts.

Zimmer (1986) study the choice between the capitalization or the registration in charge of interest charges for a sample of Australian companies in the sector of the property promotion. Contracts between the firm, the customers, the lenders and the associates are so written to prevent the opportunist behavior of the managers. The interpretation of results is that the decisions of production and investment imply simultaneously a financial structure and a bookkeeping system, debts and book-keeping systems are correlated but the two depend on the nature of the assets of the firm.

Withread (1987) puts in evidence the determining role of the existing contracts for a guarantee between the parent company and the subsidiaries in the adoption of consolidated financial statements in Australia. Results show that consolidation is adopted in the presence of guarantee contracts between the parent company and its subsidiaries. These conclusions align themselves with the conclusions of agency theory i.e.: "The consolidated financial statements are the result of contractual procedures which aim to reduce the costs of agency" (Whittred, 1987, p. 283)

Mian and Smith (1990) by studying accounting practices before the implementation of the standard SFAS 94 show that accounting decisions reflects a choice of organizational structure and are determined by the nature of the link between the parent company and its subsidiaries. The central hypothesis is that the more dependant activities among a company and her subsidiaries are, the more the performance of the subsidiary is reported according to a consolidated base. Three levels characterize dependence: operational, informative and financial. The contribution of the authors is to have introduced the organizational choice into the analysis. They think that accounting decisions have to reflect the organizational choice. Thus, the accounts of management determine financial accounts and will be determined organizational practices.

Taking as a point of departure the statement that the posting of the operations of joint ventures varies between firms in the various phases of the mining industry (investigation versus production), Whittread and Zimmer explain the accounting choices through the various types of assets and the way they are financed.

Zimmerman and Christies (1994) tried to see if the accounting choice of the managers recovers from an opportunist or efficient behavior. Results show, according to the authors, that: " efficiency is more important than opportunism to explain the accounting choice" (p. 562) and so strengthens the weight of studies done within the framework of the contractual theory of the efficiency.

Studies on the determinants of the consolidation Controversial results

Results on the determinants of the consolidation are the object of rival interpretations of those developed in the previous paragraph. It seems establishes today that the adoption of the consolidation is influenced by state rules at first, then by several factors, notably the growing acceptance of the technique by trade organizations and practitioners (Walker 1978; Bircher, 1988).Walker indicates that in Great Britain, the introduction of the consolidation is a means for holding companies to realize their activity. It is an answer to the maladjustment of the usual procedures of valuation of assets and recognition of products to take into account inter-corporate stock-holdings. On the contrary in the United States, the absence of rule before the 1930s was a source of experiment and it is the introduction of a fiscal regulation allowing consolidation that was a significant factor in the awareness of the profession of the importance of the consolidation. The regulation plays a role by confirming, for example, good practice. Bircher (1988) in his interpretation insists on the imminence of a state regulation as a dominant factor of adoption. The author contributes to the understanding of the adoption by making a distinction between on the one hand the acceptance of the idea of consolidation in the field- the preference of the actors for this kind of publication – and, on the other hand, the wide distribution of the technique (p. 5). The model precedes practice. The author demonstrates that while a consensus on the desirability of the consolidation developed in Great Britain in the 1930s (p. 6), there was a significant distance between literature and practice. Consolidation was not widely adopted in Great Britain before the end of 1940's. Furthermore, Withtred's results for the choices of consolidation are disputed in Australia (Walker, 1998).

Usually, studies of the adoption of international and American standards are made within the framework of voluntary information that states that companies publish information that is not compulsory to satisfy the expectations of stakeholders, particularly shareholders. Three studies were made on the IAS GAAP and one on the US GAAP. Results establish correlations between the part of sales abroad and the international quotation and the use of IAS GAAP in the Swiss context. In the Middle East, Al-Basteky indicates a correlation between an international listing and the adoption of IAS GAAP

The interpretations of results by the researchers are sometimes contradictory. Raffournier and Dumontier indicate " these results do not confirm the hypothesis according to which voluntary correspondence with tougher standards is used to resolve problems of guidance among the managers, the shareholders and the creditors " (, p .240). While Murphy interprets similar results as a signal sent by the managers who demonstrate their use credible standards that prevent them from creating hidden reserves.(Murphy, 1998 , p. 125).

A plethora of research handles with the determinants of the accounting choices and on position with regard to accounting exposure-drafts, we notice the very restrained number of research, even though it tends to grow these last years, having for object the adoption of standards internationally recognized. Furthermore, some studies end in rather disappointing results. Taking into account the Institutional environments in the organization seem to be a relatively more sensible way. Moreover, the case study of an Indian computer company the INFOSYS Company based on interviews is richer from the point of view of results. (Narayanaswamy, 1996).

The neo-institutional theory of organizations and the symbolic adoption of accounting standards

According to the new-institutional theory, companies use formal structures as the accounting GAAP in a concern of legitimization and independently of consequences in term of efficiency.

Role of institutional environments

The first contribution of the theory lies in taking in account a neglected facet of the environments: faiths, rules and institutionalized roles. (Meyer and Rowan, 1977)

[1]Indeed, the professionals, the State and the public opinion, as far as they produce them and infer them, are the foundation of complex rules and framework of institutionalized behavior, which are rationalized myths. These frameworks are myths because they are at first widely shared faiths effects of which are real " here, not in the fact that the individuals believe them but in the fact which they know that the others make it, and that 'practically', myths are true ". (Meyer, 1977, p. 75.) They are rationalized because they take the shape of rules, which specify necessary procedures to reach a given end.

Besides, accounting literature demonstrated that accounting was often used as a symbol of legitimacy. The rational forms of organizations, as the recognized accounting principles, are the resultant of exogenous forms of rationality, which are necessary as a means of legitimization. Organizations are recognized through a commitment in a rationality, as the use of a kind of justifiable language: accounting, obviously guaranteed, objectives and relevant (Meyer, 1986). Accounting defined as a "set of faiths and techniques which connect actions and values, that is which returns justifiable actions". (Richardson, 1987, p. 341) is a tool of legitimization toward the environment.

Decoupling of the institutional structures from technical contingencies

Practices can be more or less disconnected from the technical aspects of organizations. Rationalized myths have a structuring role for organizations, which as a consequence, adopt practices of management, as accounting standards because they are socially legitimized independently of considerations of efficiency. By following these rationalized myths, organizations receive support and legitimacy.. By acting so, organizations are going to convince their audiences - the public in the broad sense beyond stakeholders - that they are justifiable entities that it is advisable to support. (Meyer & Rowan, 1977) Westphal and Zajac (1994, 1998) suggest that the managers can satisfy external demands and increase their responsibility toward the shareholders by adopting apparently structures of external control in interest of the shareholders without implementing them. And they strengthen at the same time these actions with the used of a legitimizing language. They show through the example of executives' compensation plan in the United States where tools of can be adopted without being applied effectively.

This disconnection between the adoption of a practice and its implementation seems to be applied to accounting standards. Companies claiming compliance with certain accounting) standards, do not implement them completely. Two studies put in evidence some practices of formal compliance in the choices of accounting politics of companies. (Sha, 1998; Rutherford, 1999) Already in 1983, a study showed that standards were not applied in a corresponding way. (Evans & Taylor, 1982) A study on the application of international accounting standards in the world find some evidences of the loose coupling between the standards supposed to be in used and the actual accounting practices of companies. Eleven modalities of compliance were identified going from the total compliance with standards IAS to a description not quantified by distances with regard to standards IAS (Cairns, 2000). Besides, a study made from a sample of 49 annual reports of the 1996 of companies applying IAS, reveal significant points of nonconformity; notably the definition of the extraordinary result, the capitalization of the expenses of research and development, the posting provisions of commitments toward the employees. (Street & al., 1999)

Isomorphism and accounting

Second contribution is of for DiMaggio and Powel (1983). Noticing that organizations are more and more similar, they ask the following question: Why are organizations similar? In the answer they give, organizational structures result from conformity with the institutional environments. Their contribution lies in the identification of the modalities that lead organizations to adopt structures or similar tools of management. In search of legitimacy, organizations fit the society according to a collective rationality inferring from the institutionalization of the structure within a field. Organizations adopt similar structures as accounting standards under the pressures of institutional environments following three mechanisms: coercition, transmission of norms and imitation.

Coercitive isomorphism and the adoption of GAAP

Coercitive isomorphism appears with " formal and informal pressures exercised on the organization by the other organizations on which they depend and expectations of the society in which the company works " (DiMaggio and Powel, 1983). In other words, power is so one a central variable in the coercion, it is of use of base to the institutional influence which encourages the correspondence of behavior by means of " organized with rulers, with mechanism of surveillance and of the activities of penalty ". (Scott, 1995). It suggests a "instrumental" logic (Scott1995) or " according to consequences " (March & Olsen, 1989) Three stakeholders exerce coercive influences: The financiers who have the financial resources the company needs, the customers without whom it can not survive and the State which promulgates rules and laws which are binding for organizations.

Law: mechanism of legal coercion

The role is well known in the organizational and accounting literature. By not respecting law, the company incurs penalties. It can be forced to pay fines or still to question the righteousness. The influence of the State by means of rules on companies should not be demonstrated any more (Fliegstein,1990). The State promulgates laws and rules, which favor the institutionalization of certain practices either on the contrary slow down the diffusion of these practices. Tolbert & Zucker (1983) demonstrate that a new budgetary practice was adopted faster in the federal States, where law has been promulgated for a long time. Mills finds that already in the Middle Age, Royal 'wit' obliged some people to give accounts. (Mills, 1990) In the accounting domain, the rules are anticipated and are taken into account by the actors (Ginner Inchausti, 1997). A study led on a sample of 49 Spanish companies demonstrate the important role of the European legislation in the increase of the level of publication during the years studied on 1989, 1990 and 1991.

Investors coercion.

Accounting literature puts in evidence the determining role of the providers of money. Companies needed financial resources face the obligation to respect the demands of the most important investors (Shleiffer & Vishny, 1986). With the presence of institutional investors and reference shareholders, there should be less problems of agency. (Hill & Snell, 1989). So, institutional theory can be an alternative to the theory of the agency in the hypothesis of strong field (Toms, 1998). The dispersal of the property would not so be a determining factor of the accounting practices of companies. Individuals shareholders have less power of negotiation to reach information than institutional investor's (Zeckhauser & Pound, 1990).

At the same time, Pressures are strengthened by the demands of information made by the financial analysts. The decisions of investment are taken on the basis of the financial analysts'forecasts (Williams, 1996). The number of analysts who follow a company is correlated to the relative part of capital possessed by institutional investors. This result is substantial with the idea of an alignement of the analysts in the interests of institutional investors (Potter, 1992). The decision of the analysts to follow certain companies would even push the investors to increase their participation in the capital (O’Brien & Bushan, 1990). So, the analysts exerce coercive influences on the companies they follow, all the more strong as the number of analysts following the company would be brought up.

Customers coercition.

Coercive pressures on companies result not only from the providers of capital but also from the customers (Zarzesky, 1996) These last ones are the source of the profits of companies and thus can threaten the survival of the company by not buying products. The localisation of sales in the choice to submit itself to "big GAAP" is turned out empirically. The internationalization of companies combined with the expansion of financial markets determine the increasing homogeneity of the practices of financial accounting. . Studies dealing with adoption of international standards identify as essential factor the part of sales in abroad (Murphy, 1999; Dumontier & Raffournier, 1998 and El-Gazzar al., 1999).

The transmission of norms and the adoption of GAAP

Within the business world, the professionals prescribe practices. Practices are adopted because they are prescribed. Then, norms are transmit by the process of authorization defined by Scott (1995). The professionalization of the management activities of companies is the reason of the adoption of certain structures and practices. Indeed, the professionalization leads to a normative isomorphism that is based on the transmission of norms. Normative isomorphism to exist supposes two elements: a transmission of norms by professionals and a mechanism of prescription. The phenomena of accreditation recover two types of accreditation in the accounting field: the auditors and the regulation bodies of stock exchange.

The auditors and the certification of financial statements

The auditors guarantee the financials statements of companies but they can refuse if they judge that accounts are not satisfactory, whether they do not give a "accurate image" of financial situation and patrimony of the company in Europe, or whether accounting practices are not corresponding to standards in the United States. Results are reserved; on three studies studying the association between the adoption of international accounting standards and the listing status (Al-Basteky, 1995 Dumontier & Raffournier , 1995 and Murphy , 1999), only Al-Basteky results are significant towards the role of the auditors. A case study demonstrate the determining role of the auditors. (Narayanaswamy, 1996)

Similarly, , international standards are more binding than French standards in regard to the volume of information to be published and the publications of voluntary information is correlated with the status of the auditors. Then, the companies for which a "quality" auditor audits financial statements will adopt more easily accounting standards internationally recognized.

The registration close to Stock-exchange bodies

Stock exchanges impose certain standards on their members. The volume of information to be published is variable according to the place of quotation. Numerous studies show the effect of accounting rules on the financial policy of companies. The choice of a place of quotation is influenced in a negative way by the constraints of publication (Saudaragan & Biddle, 1992; Saudaragan & Biddle , 1995).

The “authorization”, contrary to the coercion supposes that subordinate entities are not obliged but look voluntarily for the approval of the authorizing agent. Stock-exchange rules apply only to companies that decided to be registered with a stock exchange. Companies can delocalize an issue of loans because of differences in accounting obligations (Flanigan et al. , 1999). It is not so a link of dependence but a relation of recognition centered on a normative legitimacy.

Imitation and the adoption of GAAP

Imitation consists in granting a central place to the similar organizations in its choices. (DiMaggio and Powell, 1983). In situations of uncertainty, when the link between the appearance and the substance is not established, organizations model themselves to the others. In other words, the administrators of companies facing a situation of uncertainty, adopt more gladly behavior similar with the behavior of the organizations with which they liked to be assimilated either companies exercising the same activity, or the companies having the same financiers either still the most talented companies (leaders). Mimetic adoption supposes the three elements: an uncertainty towards the effects of the tools, a copied and adopted model and a mechanism that makes link among the first two elements (cognitive legitimacy).

Generally, accounting literature shows that industry is a key variable in determining accounting policy. The study of Neu (1992) is the first, which interprets the influence of the sector as an influence of mimetic order. The companies of the mining sector and the financial institutions publish more frequently forecasts of profits at the time of public appeals to the saving. It demonstrated statistically that the variable " sector membership " is significant.

Let us add that imitation is made possible by the approval of the managers. The perceptions of the individuals play so the role of catalyst in the accounting choices. (DeBos, 2000; Adam, 1996). So, American authors stand out that companies having adopted by anticipation standard FAS number 106 have managements' teams with twice more individuals having a training in finance and in accounting that the companies which did not adopt this standard by anticipation (Ciccotello et al., 2000, p. 102).

2. The methodology of search

The choice of the case study

Justification of the methodology

The research question is the following one: Which are the respective roles of the coercition, the transmission of norms and the imitation to explain the adoption of international GAAP by French firms? Our objective is to explain a decision, case study is the methodology of adapted search (Yin, 1994 ; Eisenhardt,1989).

The selection of cases

The objective of the analysis is to obtain representative cases. Indeed, the choice of cases is not make in an unpredictable way. Naturally, accessibility to the ground is necessary as a constraint. The modalities of use of accounting standards internationally recognized were reserved criterion. Considered period is marked with the institutionalization of the IASC. Cases are so representative of behavior "types". Aerospace industry in 1989 marks a clear choice for the IASC while Usinor in 1991 chooses standards IAS while publishing a reconciliation with US GAAP. Finally, Coflexip opts for American standards in 1993 at a moment where IAS is become strongly institutionalized.

The collection and the data processing

Collected data

In organizations, the written tracks are particularly important (Atkinson and Coffey,1995) Multiples sources of evidence were used: , the documentation (Annual reports (at least 5 years by case)the 20-K of SEC, press), and interview with managers (auditors or companies chief accountants).

Data processing

We use interactive model recommended by Huberman and Miles (1994). It appeals to three constituents or convergent activities: a phase of condensation of data, a phase of organization and presentation of data and a phase of interpretation and check.

First of all, a stage of coding allows so transform a multitude of documents, the transcriptions of interviewsinto a coherent analysis capable of answering the question of search. The coding allows only to generate an index of narrative fragments which, took insulation, have a priori no sense.

In second place, from then on for every case, a work of articulation and structuration of data is led "to test" our propositions. This work of articulation is realized due to matrix and figure of presentation, built as the case may be and according to meditative data, with the aim of getting in touch the variable among them and to cast the bases of an explanation and a possible interpretation.

Finally, lastly, cases are presented and analyzed individually and a synthesis of results based on the comparison of cases.

Aerospatiale: adoption of IAS in financial statements 1989

The company is in the aerospace industry. It began to use international accounting standards in 1989: "Aerospatiale Consolidated financial statements are established for the first time in 1989 according to Accounting principles generally accepted internationally, recommended by the IASC." (RA, 1989). Compared to previous accounting practices, changes in accounting practices without being revolutionary are real because " restatement (were) little except as those regarding the reprocessing of the leasing, the consideration of the commitments of pension and the consideration of the aspect GIE (at first IAS implied stake in equivalence)". (Interview with MC) Furthermore, since 1991, the group applies the standard IAS 31, which allows integrating proportionally participation into joint ventures.

Coercive isomorphism

On the one hand, the company is subject to coercive forces from the State but not from the lenders. On the other hand, The Company is not actually subject to investor’s desiderata's at the time of the adoption. Moreover, the company is subject to the pressures of foreign customers.

Law: factor favoring adoption

The French State legitimates consolidated accounting, but leaves the actual implementation relatively unspecified. At first, as French group, Aerospatiale has to respect the legal obligations of the law of January 3, 1985 and its decree of application of February 17, 1986. The law becomes applicable for fiscal year opened after December 31 for the year 1990 at the latest for the unquoted companies (and for those that did not emit commercial paper). Furthermore, it is compulsory for companies to produce consolidated accounts following the methodology recommended by the "Arreté" (“wit”) of December the 9^th of 1986.

In fact, this framework ensured a fairly large degree of flexibility in the accounting rules and choice. The article 357-7 of the law on July 24, 1966 (modified by the law of 1985) stipulates that "consolidated financial statements are established according to accounting principles and rules of evaluation of the Commercial law. It considers the resultant indispensable characteristics of organizations appropriate for consolidated accounts with regard to statutory accounts ".

In other words, optional restatements allow retaining accounting practices in contradiction with those, usual in statutory accounts in France, prescribed by the Commercial law. The article 357-8 clarifies that "under reserve to prove it in the appendix, the parent company can use rules not corresponding to those fixed with articles 12 - 15 of the Commercial law in provision with the article 11 of the Commercial law ". (Article 348 - 8 of the law of 1966 modified by the law of 1985)

By allowing a disconnection between statutory accounts (taxation and legal entity purposes ) and consolidated financial statements it opens the way to the adoption of practices in phase with those usually used by multinationals, such as the capitalization of the lease or the presentation of the income statement by destination and not by nature as usual in France (Hoaraux, 1995) A study of the « Société Française d’Analyse Financière » (Chartered French Financial Analysts) demonstrates the compatibility of the Methodology of the CNC with the US GAAP and with IAS Framework. So we notice that the law and the methodology are not really a constraint but on the contrary are an opportunity for the company.

Absence of effective pressures of investors

The figure 1 below, which resumes debenture loans by Aerospatiale, shows well that the group did not issue any "international" debenture loan at the moment of adoption. There are no actual pressures of the investor's in 1989. Debenture loans in Francs and in Euro francs were issued previously, there has not been any new issue from 1988 till 1990 included.

Figure 1: The public loans of the Aerospace industry from 1987 till 1993

We note an increasing amount of foreign financing after the adoption. This element has probably been anticipated in the decision. According to the accounting manager, "the choice of the GAAP deals with the financial strategy, the aim is eventually a presentation of financial statements according to principles internationally recognized for an intervention on the American markets. Aerospace industry is a heavy consumer of funds and the European markets are too narrow". (Interview with MC). International accounting standards are adopted to demonstrate a commitment to the international financial community. It is by anticipation on a voluntary base and not in answer to a constraint that international standards are adopted.

Strong dependence with regard to the foreign customers

The company depends very strongly on foreign customers who represent the two third of the sales. The company has to satisfy the customers in generally known term. To make the use of international practices of management is an asset.

Figure 11: Distribution of the turnover France - foreigner for Aerospatiale

Normative isomorphism

The auditors

The certification of accounts is anterior to the adoption. Except the reference to the new standards in their 1989's report: "We confirm you the changes of methods resulting from the adoption of accounting principles generally accepted in the international plan" (Report of the auditors in April 10, 1990), there is no significant change in the process of certification. Young. Financial statements are always signed in Paris evenven, if "Castel Jacquet & Associés" is a member of the international network Ernst & Young Furthermore, the second auditor called "Robert Mazard" is typically French.

Stock-exchange bodies

Apparently, the obligations of publications were already respected before the adoption of IASC's standards. The quotation of obligations on a foreign stock exchange has taken place since 1987, "at the moment, debenture loans in Francs and in Eurofrancs were issued on the stock exchange of Luxembourg." (Interview with MC). Besides, the stocks of the company are not quoted on a stock exchange,

Neither auditor’s, neither stock exchange seems to exercise an influence in the adoption of international standards.

Mimetic isomorphism.

The mimetic isomorphism seems to be a possible explanation for the adoption. All the elements of mimecry have been identified.

The company faces a situation of uncertainty. The managers know that they are going to have to face a demand of investor’s but they do not know the precise nature of this demand. As we saw, managers explain that needs of funds are probably going to appear and the European financial market is too narrow. As a consequence, they do not know which solution to adopt to inform them.

IASC standards are becoming true accounting standards and not just a kind of “Smaller common multiple” of practices in different countries.

The institutionalization of IAS's standards is becoming stronger in 1989 than before at the international level as well as in the French context. We can say that a structured framework of standards is emerging and is now competing with US GAAP.

Two reasons explain this tendency. First, from a technical point: new important standards have been recently promulgated in 1990. At the same time, from the institutional point, the IASC is setting up a strategy of alliance with bodies in the field of international accounting to support and to apply standards.

From the technical point, in 1988, the IASC published "the Framework for the preparation and presentation of Financial Statement". It objective is to give conceptual foundations to promulgate standards.

In 1989, the IASC constituted a real framework of consolidation. According to the table below accounting standards for consolidation (IAS 27, IAS 28 and IAS 31) were promulgated in 1989.

Figure 3 : the most recent standards of the IASC

The IASC, criticized because of the existence of alternative treatments become more credible accounting framework in 1989 with the exposure draft 32. By doing so, it undertakes a program towards the reduction of the number of options allowed by various standards.

From the institutional point, the IASC receives the approval of important bodies to increase its credibility with regards to the international financial community.

At international level, the American standards setter joins the consultative group in 1988 and associates stock-exchange bodies to his works. The decision of the IASC to start "comparability project" was strengthened with the support of the OICV. This support deals with representatives' participation of the OICV (the chief accountants of the French Stock Exchange, the Ontario Stock Commission (Canada) and the SEC (USA) in the meetings of working groups dedicated to the improvement of international standards. The Comparability project takes into account the opinion of the stock-exchange regulators. One of four criteria used explicitly to choose between alternative treatments was the "sight of regulators and their representative organizations, as the OICV ". (IASC, 1989, p. 12)

French actors have an actual role in the structuration of the field. They are strongly involved in the various organizations and, they possibly influence standards promulgated in favor of the French companies. Since 1987, the president of the IASC, Georges Barthes de Ruythers is French. One of the representatives of the OICV is French.

IASC is so becoming legitimate at two levels: international level and national level. So, the framework is becoming institutionalized in a field in development

Behavior of the similar companies

The IASC standards became legitimate in France. The graph below puts in evidence the number of French companies (except financial institutions) having adopted internationally recognized standards (made abstraction of change of alternative standards).

Figure 22: Number accumulated by adoptions from 1970 till 1996

The analysis of the practices of the French companies shows that 1989 is exactly the year during which the number of new adoptions is the highest. It proves that Aerospace case is not an isolated case. An effect of contagion within the French companies is daylight. Among the most important companies, the number of companies using international standards passes from 24 to 31 (an increase of 22 % in the space of one year and changes make only in favor of the IAS). Among the most important 100 industrial firms, nobody adopted US GAAP.

The IASC has the influence to encourage adoption of a particular practice but it lacks the influence to mandate them. Thus, adoption has been done only because managers are receptive to the standards. Manager’s perceptions seem to play an important role in the adoption. The company chooses the IAS's because it is justifiable in the eyes of the accounting director but also because US GAAP does not appear as a solution. The accounting director would like to apply accounting standards on which he can weigh: "FASB's is above all national, standard IAS is a synthesis of continental standards and Anglo-Saxon standards a bigger common denominator), one can press on these standards and participate in their elaboration. The Lobbying is very important because it would be dangerous to apply standards on which one can not weigh." (Interview with MC)

The accounting s back American standards used by the competitors. Moreover, the comparability with the competitors is a priority. The competitors of Aerospace industry are not numerous and use American standards but anyway, their accounting policy is not comparable "Our accounts are careful with regard to those of Boing which immobilizes the ' triangle of starting up ' then amortized) on a series of planes. " (Interview with MC). The adoption of US GAAP does not change the figures.

In the case of Aérospatiale, the relative dependence of the Group on the foreign stakeholders is condition of the decision of adoption. It explains mimetic isomorphism Managers were probably a catalyst. No element allows making reference to possible normative sources.

Usinor-Sacilor

In 1991, Usinor-Sacilor adjusts accounting policy to standards promulgated with the IASC "The group decided to adopt accounting principles generally allowed in the international plan recommended with international Accounting Standard Committee (IASC). " (RA 1991, page 12) Besides, it supplies a reconciliation of net income and stockholder’s equity computed under IAS standards with corresponding amounts computed under U.S. G.A.A.P. A complete note of appendices is dedicated to a "summary of differences between accounting principles followed by Usinor Sacilor and those generally accepted in the United States (US GAAP)." (RA, 1989) Simultaneously, correspondence with the French law and the decree of application is always indicated.

Coercive isomorphism

Law does not prevent the company from using international accounting principles which an answer to the pressures of stakeholders.

The French Law on consolidated account: factor favoring adoption

Law has a coercive effect on accounting practices, but, here, paradoxically, it allows departure from practices used in statutory accounts. So, as in the case of Aérospatiale, accounting principles, in phase with international principles can be so implemented. As soon as 1988, most of changes concerning evaluations were anticipated: consideration of the provisions of pensions, for the French companies, in 1988 and capitalization of the lease in 1990. The two concomitant changes of the adoption concern the durations of amortization of Goodwill from 5 to 20 years and the adoption of the SFAS 87 (compatible with the IAS 19).

On the other hand, with the adoption the presentation of financial statements evolved: the classification of expenses is now made by destination and not by nature as recommended by the French “Plan comptable” in the income statement, the presentation of the balance follows the criterion of liquidity and a statement of cash flow appears.

Pressures of the investor’s

Officially, that adoption is made to answer the expectations of the investor’s. The report of the Board of directors clarifies: "Usinor Sacilor decided to adopt for the presentation of consolidated financial statements in 1991, accounting principles recommended by the IASC, principles generally allowed by the international financial community" (RA, on 1991, page 3).

The search for capital may have played a role in the adoption. Although the managers of the group do not seem a priori interested in American capital "The European markets are not unimportant compared to the volume of American markets. " (Interview with MG). From 1989 till 1992, the part of foreign financing passes of less than quarter to almost the half of total financing. That is that the year of the adoption financing in foreign currencies represents 45 % of the amount of loans.

Even though the administrators do not intend to raise capital in the United States, reconciliation with US GAAP is used. Let us underline that " the technique of connecting is enough for the comparability with the leaders " (Interview with MG). By using IAS in financial statements and providing a reconciliation, the comparability with all the competitors is assured because "the leaders are Japanese (Japanese Steel) and Korean; they adopted FASB GAAP. The Europeans (FRG) have IAS GAAP. " So, IAS GAAP also answers the concern of comparability.

The accounting manager qualifies his comment by explaining that the choice of the reconciliation was able to exercise only in technical limits: "no communications problems provided that distances between figures IAS and US are weak." (Interview with MG),

Figure 33: Distances between the accounting indicators calculated according to standards IAS and FAS (USINOR SACILOR)

The table above quantifies incidence on the net result and on the stockholders' equity of the two GAAP.

Calculated income following American standards is systematically more important than the same calculated income following international standards. The year of adoption, the distance is almost 20 % (weak for the manager!). It increases later. Stockholders' equities are systematically more important when they result from the application of the American standards than according to IAS GAAP.

Pressure of the international customers

The group is strongly internationalized because it realizes the major part of its sales abroad.

Figure 44: Sales in billions

Normative isomorphism

Certification by international auditors

Adoption corresponds to an internationalization of the certification. Since, 1991 the certification is made collectively with an American auditor. So, in 1991, consolidated accounts receive a real international certification. Accounts remain signed by the French usual auditors. Arthur Andersen, established in Chicago signs consolidated accounts. It can explain the use of international. In order to sign accounts the auditors required the use of credible accounting standards.

Stock exchanges

The group is not quoted on a stock exchange. Thus, no particular rules concerning the disclosure of information are applied. . Nevertheless, a possible privatization is envisaged. The adoption of method of rational management can serve then to demonstrate that the group, even though it is controlled by the State, works as the other groups of the sector or as the other multinationals.

Mimetic isomorphism

Companies becoming identified as Global Players can opt either for American GAAP, or for IAS GAAP. They will choose the most justifiable which is IAS in European context.

Legitimating the IASC

The strategy of legitimization of the IASC continues. The organization completes a program of modernization in association with top bodies like stock-exchange regulations, the national and regional accounting standards setters.

From 1990, a first annual conference, aiming to help to reach the objectives of comparability standards, was organized by the Union of the Experts-comptables European (FEE), the FASB and 19 other standards setters. Since March 1990, the European Commission has an observer's status within the Board of the IASC. So the IASC start to be recognized in Europe.

Several persons represented the IOSCO: the chief accountants of the French Stock Exchange commission and the Ontario Securities Commission (OSC) and a chief accountant of the SEC and a representative of the UK securities (p. 61).

On the technical plan, the council of the IASC take place on June 20 and 22 in Paris. The agenda deals with: " Comparability of financial statement ". (Gélard, 1990b). At the same time, the project of Comparability was transformed into an improvement project) to implement the changes of the phase of Comparability. The table below shows that "Comparability Project" is at the heart of the debates of the council of the IASC. In a general way, the improvement of existing standards with the reduction of the number of options in standards is already well moved at the end of the year 1991.

Figure 55: the meetings of the council of the IASC in 1990 and 1991

Reference group

For several years, the totality of the adoptions of GAAP has been in favor of the IASC. We can say that Usinor-Sacilor adopts dominant GAAP.

One finds nevertheless a partial disconnection with the actual accounting policy of the firm that is guided by several American standards.

The accounting GAAP have more or less an American substance while appearing to follow at first the IAS confers on the group a cognitive legitimacy.

The perceptions of the leader influenced the modalities of adoption. The group is an European group while American GAAP are perceived at first as national " the GAAP of the FASB are national which sticks on the normalization US adapted to the American environment." (Interview with MG).

Figure 8: New International's GAAP adoptions from 1985 till 1989

Coflexip: adoption of US GAAP in the financial statements

The case of COFLEXIP is interesting, as the group adopts the American norms during a period of strong institutionalization of the IAS standard.

Characteristics of the adoption

The group Coflexip adopts American standards in extenso (in their entirety) even if its practices remain compatible with the French legal frame. The consequences concern essentially the volume of information published, with the production of a document 20 - K deposited with the SEC. One notes few changes in the methods of evaluation, with the exception of the long-term contracts, which are booked in advance, and not upon completion. On the other hand, the volume of information to be supplied is all the more important as the company capital was closed previously. Furthermore, new sizes of presentation appear like the charges, which are presented by nature.

Coercive isomorphism

French law

French law would have been able to prevent adoption, but the chosen options remain compatible with the French law. Even though compatibility is less evident than with the IAS. The chosen options allow to make practices compatible with both GAAP: American and French.

Coercive role of the investor’s and financial analyst’s.

The financials analyst’s upon whom depends the firms ability to get funds.

The adoption of American accounting standards is concomitant in the passage of the status of the company from closed to that of open company. From none in 1992, the fraction of public capital increased considerably since 1993 (30 % at the end of 1993 and about 50 % at the end of the year on 1996). Knowing that shares were emitted only in the United States in 1993, the American financiers possess a third of the shares at the end of 1993, the company faces explicit pressures of their part because "the addressees of financial status are above all, firstly the American investors". (Interview with MC) As a consequence, the financiers associated with the financial analysts play a binding role. Constraint does not directly result from the quotation, which can be only symbolic but because this quotation is translated by a real thorough appeal because " the companies which finance on the American market are in the obligation to adopt American references, at least the table of passage. Only the companies, which do not have to be financed on the American market, face a choice. " (Interview with JMK) It is not so a choice but on the contrary an answer to an outside constraint: " The leaders were convinced that US GAAP standards are not adopted as the result of a choice but are necessary as a fatality. " They had the feeling that they could not go on the market without the US GAAP. " (Interview with M.C.)

There are necessities of hard capital, one was able to find a " effect of the sector, required by sector-based comparisons … No French analysts specialized in this sector… in the United States, one is confronted with analysts who know the profession. The American analysts well know the aroundpetrol sector, the companies of these sectors are going so to prefer to make their placements on this market " (Interview with M.C.) This effect could have been an indication of imitation but the comparability, is hoped. So it involves a precise result.The decision of the analysts to follow certain companies would even lead to a decision of the investors to increase their participation in the capital (O’brien and Bushan, 1990)

Normative isomorphism

The phenomenon of transmission of standards appears to two levels:

- At the level of the auditors who have the influence's' role;

- At the level of the NASDAQ.

Intervention of the auditors

Before the adoption, the firm of auditors in charge of the certification is a purely French cabinet (Exco-Audit ) represented by Jean-Pierre CORDIER and the French representative of Ernst and Young. Adoption did not bring about a change as firm of auditors. The representative of an international cabinet already guaranteed accounts. Nevertheless, everything else unchanged, the year of adoption of American standards corresponds to the arrival of a pro-US personality, an American auditor JMK, connected with the French representative of the group Ernst and Young. The year of adoption, consolidated accounts are explicitly guaranteed in New York.

The intervention of the auditors as prescriptor is sure: " JMK's driving, proactive Role, is its speciality " (Interview with MC) It was facilitated by the fact that "the President was not fascinated by accounting problems.". (Interview with MC.) So the listener was capable of imposing his vision of things. Now, it is evident that Mister JMK makes a real plea in favor of American standards.

Coflexip has to adopt American standards by obligation (coercitive isomorphism) but the choice of the GAAP is the resultant of normative isomorphism..

Role played with the NASDAQ

«The Bank of New York» introduces the company on the NASDAQ on November 18, 1993. It is about a level quotation III that has for consequence to increase in a significant way information to be supplied to the investors. "The adoption of standards is bound to the NASDASQ. Standard US is repository is the national reference" (Interview JMK) But To do it, a reconciliation would have be enough but it was not chosen "no discussion during the AG, I do not say that the problem was not evoked ".(Interview with MC) Anyway, " quotation is the decisive factor " even though the other factors as: " people who played a role, the banks who place the paper maybe, it is not excluded " ( MC) should be taken into account

Mimetic isomorphism

Several indications could be interpreted as being imitation but they are not. At first, the behavior of the firms in the petrol sector adorned tanker quoted in financial information in United States is to imitate not because of an uncertainty but for reasons of efficiency: to return legible accounts for the analysts as indicated above. Then, the leaders were not able to interiorize standards because, as engineers, they are not familiar with the accounting department. This case thus questions the generally accepted hypothesis of the susceptibility of the managers in environmental prescriptions. The managers allowed themselves to be convinced because they are foreign to the accounting department and not because they were confronted with the tools during their training or during their past experiences as indicated in the literature.

Coercive isomorphism was the catalyst of the adoption. A double normative isomorphism (pressure of the auditors and accreditation of the NASDAQ) determined the modalities of the adoption finally retained.

Conclusion

Conclusion puts in evidence the relative place of various isomorphisms when comparing cases. Then, we insist on the contribution of the theory, which substitutes a criterion of legitimacy for a criterion of efficiency to explain the adoption of accounting standards. Finally, we show which are the limits of this search to open perspectives of future searches.

Comparison of cases

The comparison of cases shows that there are two internationally recognized Accounting framework (GAAP) that answer peculiar necessities. American standards are adopted because they are beneficial for companies. By this way, Coflexip fulfills the expectations of the investors and the American financial analysts and Usinor compares the group with its Non-European competitors. Standard IAS is adopted because they make organizations understandable (cognitive legitimacy) in an international context. Aérospatiale and Usinor, even though they remain controlled by the French State belongs to the global Players and therefore they use standards IAS.

Accreditation by the NASDAQ is suitable for high-tech companies such as Coflexip. Furthermore, in the case of a company as Coflexip, with leaders rooted in an engineering culture, the auditor played the role of the influencer's. On the other hand, the auditors do not appear to play a particular role when the administrators are actively receptiveto the internationally recognized standards (Aerospace industry), except when adoption, as in the case of Usinor, is credibly bound to the internationalization of the certification.

Figure 9: Comparison of cases

Section 10 - implicit Contribution: legitimacy as rationality.

The role of legitimacy is not unimportant in institutional theory as far as a fundamental consequence of the isomorphism is the acceptance of the organization by its external environments, that is the organizational legitimacy. Recently, legitimacy was defined an " hypothesis or (a) generalized perception that the actions of an entity are desirable, appropriate and suited inside a system of standards, values, faiths and definitions that are socially constructed " (Schuman, 1995, p. 574) The rationality of institutional theory is based on the legitimacy. This constitutes the regulating mechanism by being a functional alternative to efficiency, that is that organizations can look not for the efficiency of the result but for legitimacy by conforming to the expectations of the environment on the way things are done. Within a field a tendency towards conformity, called isomorphism, is emerging.

Figure 10: links between institutional pressures and legitimacy

Limit and perspective: the internal dynamics of the change

Institutional theory is not a theory of organizational change but an explanation of the similarity and the stability of institutional classifications in a field or a given population. The adoption of international accounting standards is not so the result of a change but the product of a registration in an institutional field, in an arena. Maybe it explains " the contextual dynamics which precipitate the organization towards the change " (Greenwood and Higgins, 1996 , p. 1003) but it does not allow to say exactly why organizations adopt certain practices while the others do not in spite of identical institutional contexts. The theory is not strong enough to analyze the internal dynamics of the change. Recent works recognize that organizations influence, escape and resist to institutional pressures (Oliver, on 1991). This open perspectives for future research.

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Figure 1: The public loans of the Aerospace industry from 1987 till 1993

Date issue)	AMOUNT	Interest	Type
1973	Loan Gifos / Ufremer
1984		TMO	Dom
1984		TAM	Dom
1987	75 billions Ecus	75/8%	Inter
1987	True 600 billions Luxemburg	7,5 %	Inter
February, 1991	1000 BF	9,6 %	Dom
September, 1991	1000 BF	9,4 %	Dom
September, 1991	100 Billions Ecus ( 698 MF)	9 ¼ %	Inter
February, 1992	140 BF	Zero coupon	Dom
March, 1992	1 000 BF	9,375 %	Inter
March and June, 1992	1 800 BF	9,125 %	Inter
November, 1992	1 000 BF	8,7 %	Dom
February, 1993	1 000 BF	8,375 %	Inter
May, 1993	100 Billions Swiss francs (377 MF)	4,75 %	Inter
July, 1993	1 500 BF	7 %-	Inter

Figure 2: Distribution of the Sales France - foreigner for Aerospatiale

	France		Export		Total
1993	16388	0,32	34462	0,68	50850
1992	19829	0,36	35427	0,64	55256
1991	17090	0,35	31496	0,65	48586
1990	15846	0,45	19391	0,55	35237
1989	13699	0,40	20204	0,60	33903
1988	13088	0,34	25129	0,66	38217

Figure 3: Most recent standards of the IASC

E28: The posting of participations in the associated companies and the joint ventures (in July, 1986)

" Framework for the preparation and the presentation of financial statements " (ED, may1988)

E32: Comparability of Financial Statements

(January, 1989)

IAS 27: Consolidated Financial statement and accounting for investments in subsidiaries. (In April, 1989)

IAS 28: Investment in associated companies (April, 1989)

IAS 29: Financial Reporting in Hyperinflationary Economies (July, 1989)

E35: Financial Reporting of Interests in Joint Ventures

(December, 1989)

IAS 31: Financial Reporting of Interests in Joint Ventures

(December, 1989)

Figure 4: Number accumulated by adoptions from 1970 till 1996

Figure 5: Distance between US GAAP and IAS GAAP for Usinor Sacilor

	1991	1992	1993	1994
Net result (Franco-IAS)	-3032	-2421	-5741	1006
Net result US GAAP	-2556	-1867	-5062	1713
	-476	-554	-679	-707
	-0,19	-0,30	-0,13	-0,41
Stockholders' equity Franco-IAS	23669	20973	15080	16012
Stockholders' equity US GAAP	24325	22283	17119	19862
	-656	-1310	-2039	-3850
	-0,03	-0,06	-0,12	-0,19

Figure 6: Sales in France and abroad for Usinor Sacilor

	1991		1992		1993		1994
France	33157	34,12 %	28 483	32,76 %	24237	32,18 %	25227	31,75 %
The other EEC	38851	39,98 %	37 288	42,88 %	27363	36,33 %	28623	36,02 %
The United States	12049	12,40 %	10 455	12,02 %	11222	14,90 %	13337	16,78 %
Rest of the world	13120	13,50 %	10 724	12,33 %	12487	16,58 %	12271	15,44 %
Total	97177		86950		75309		79458

Figure 7: Sales in billion (Usinor-Sacilor)

Place and date	Important decisions
Amsterdam (March, 90)	Tables of streams, immaterial immobilizations, comparability financial statements, standards of the PVD, financial statements of banks and assimilated establishments and financial instruments
Paris (June, 90)	Project of standard on the financial statement of banks, project of statement of intention " Comparability of financial statement ", project on the posting of the immaterial
JULY 1990	Statement of Intent - Comparability of Financial Statements
Singapore (November, 90)	Exam of E35 for approval, profit by action, reaction to the contents of the project on the immaterial, project on financial instruments
London (February, 91)	Publication of a statement - sounding on the statement of cash flows and statement - sounding on the expenses R&D
Milan (June, 91)	Two texts (IAS 2 on the evaluation of stocks and IAS 23 on the capitalization of interest charges) within the framework of the statement of intention following on the project of comparability
Seoul (November, 91)	Approval of 3 statements soundings (IAS 11, 18 & 22)

Figure 9: New International's GAAP adoptions from 1985 till 1989

	Companies	1ière adoption	Following changes
20	DMC	Inter, 1986	IASC, on 1987
21	Lagardère Groupe	Inter, 1986	Application of the FAS 52 since 1982
22	Air(sight) France	IASC, 1986
23	Clarins	IASC, 1986
24	Total	IASC, 1988	Desolation IASC in 31/12/95 SFAS 87 , 95 , 106, 109 , 115 and 119 in 1994 SFAS 13 , 19 , 52 in 1995
25	Essilor	IASC, 1988
26	Télémécanique	Inter, 1989	IASC, on 1990
27	Aerospace industry	IASC, 1989
28	Bongrain	IASC, 1989
29	Canal +	IASC, 1989	SFAS 53 in the 31 12 95
30	CBM PACKADGING	IASC, 1989	Disappearance in 1992
31	Schneider	IASC, 1989	IASC and
32	Valeo	IASC, 1989
33	Axe Guérin	IASC, 1990
34	Pinault	IASC, 1990	Desolation of the reference in 1991
35	Moulinex	IASC, 1991
36	Usinor	IASC, 1991	SFAS 87 and SFAS 106 in 1991 SFAS 106 and SFAS 109 in 1992
37	OCP	IASC, 1/10/1991
38	Five-Live	Inter, 1993

Figure10: Links between institutional pressures and legitimacy

Institutional pressures	Isomorphisms	Collective rationality
Pressure	Compulsory standards	Pragmatic legitimacy
Transmission of standards	Recommended standards	Moral legitimacy
Imitation	Used standards	Cognitive legitimacy