The role of international financial reporting standards in attracting foreign direct investment and its impact on economic development in Egypt

Document Type : Original Article

Author

Accounting Department Faculty of Commerce Alexandria University Alexandria Egypt

Abstract

The study aims to analyze the effect of adopting the international financial report standards on attracting foreign direct investments to Egypt and its role in achieving economic development, as foreign direct investment contributes to achieving economic development by providing the capital necessary to finance the economic development process, which leads to an increase in the rate of growth Economist, create more job opportunities and reduce poverty rates. Most countries, especially developing countries - including Egypt - strive to attract foreign direct investment to them by improving the investment climate and providing the incentives and privileges necessary to attract them, and it is considered one of the most important factors affecting attracting foreign direct investment is the provision of high-quality, appropriate and reliable accounting information, including It helps foreign investors in making rational investment decisions, by comparing available investment opportunities in different countries, and accounting standards are the main determinant of the quality of accounting information, as it is expected that adoption of reporting standards will contribute International Finance in developing countries in providing accounting information that is appropriate, reliable, credible, understandable and comparable both at the local or international level, which helps foreign investors in identifying available investment opportunities in those countries and attracts more FDI flows to them. Therefore, the study analyzed the effect of adopting the international financial report standards on attracting foreign direct investment in Egypt, during the period 1991-2015, and the results of the study indicate that although there is a positive correlation between foreign direct investment and the adoption of international financial reporting standards in Egypt, where The adoption of the IFRS standards is accompanied by an increase in the volume of foreign direct investment, but the results of the regression analysis indicate that there is no influence - a causal relationship - between the adoption of the IFRS standards and the size of foreign direct investment, as the adoption of the IFRS standards Internationally, it did not fundamentally affect FDI flows, and the results also indicate that there is a positive moral effect of the rate of growth in GDP - one of the most important indicators of economic development - on FDI flows to Egypt, and the results also indicate that there is a significant negative impact The political risks to FDI inflows to Egypt.

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