The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1832-5912.htm

Financial
Financial accounting regulations accounting
and organizational change: regulations
a Habermasian perspective
289
Mostafa Kamal Hassan
Department of Accounting, College of Business Administration,
University of Sharjah, Sharjah, United Arab Emirates

Abstract
Purpose – This paper seeks to understand the role of financial accounting regulations in a less
developed country in transition, Egypt. It explores the social, political as well as economic contexts
that underlie the processes of setting the Egyptian Financial Accounting Regulations (EFAR) in a
harmony with International Accounting Standards (IASs).
Design/methodology/approach – The paper is based on in-depth interviews and an analysis of
documents. It relies on Habermas’ notions of society’s lifeworld, institutional steering mechanisms and
systems in order to link the changes in EFAR to the changes in the wider social, political and economic
contexts wherein organizations operate. The paper also explores the role of EFAR, as “regulative” or
“constitutive” steering mechanisms, throughout two longitudinal episodes; starting with the
beginning of socialism and extending to liberalism.
Findings – The paper finds that the EFAR have had a constitutive tendency during the Egyptian
transformation towards a market-based economy. Although there are remarkable changes in political
philosophy in Egypt, the regulators’ motivations and the processes of the accountancy profession that
mobilized the formulation of EFAR in harmony with IASs, those regulations were acted upon to
constitute organizational members’ values, norms and knowledge in order to overcome the persistence
of the socialist accounting practices. The regulations were also aimed at enhancing professional
conduct and, at same time, increasing organizational members’ adherence to the processes of
privatization as a part of a wider movement towards transparency, democracy, full disclosure and
liberalisation.
Research limitations/implications – The paper emphasises the interface between a macro social
transformation and micro organizational responses in order to understand the role of EFAR. However,
it does not stress how the actual implementation of those regulations is implicated at a micro
organizational change level. Furthermore, the paper covers a timeframe – 1952 to 2000 – that extends
from the start of socialism extending to liberalism. Although the IASs are now known as International
Financial Reporting Standards (IFRS), the paper covers a period in which such IFRS were not
applicable in Egypt.
Originality/value – The paper contributes to the understanding of the social, political as well as
economic role(s) of financial accounting regulations in a transitional country during that country’s
transformation towards the market economy.
Keywords Accounting, Regulations, Organizational change, Egypt
Paper type Research paper

1. Introduction
Although much of the existing research dealing with the role of financial accounting Journal of Accounting &
regulations in developing countries investigates the relationship between accounting and Organizational Change
Vol. 4 No. 3, 2008
the context in which it operates, the literature suggests that as the economic environment pp. 289-317
changes so does the demand and use of financial information, leading to the evolution of q Emerald Group Publishing Limited
1832-5912
new financial accounting regulations (Chamisa, 2000; Belkaoui, 2004; Xiao et al., 2004). DOI 10.1108/18325910810898070
JAOC However, explaining the role of accounting regulations requires an exploration of the
4,3 complexity of the social, political and economic context wherein these regulations emerge
and change (Hopwood, 1987, Laughlin, 1987), particularly, when the change in accounting
regulations takes place in a less developed country in transition.
The paper broadly defines the term “accounting regulation” to incorporate the
activities of government, regulatory agencies such as capital markets, and professional
290 or trade associations (Taylor and Turley, 1986, p. 1). “Regulation” refers to legislative,
administrative and professional controls over various aspects of accounting activities
performed in the private and public sectors (Roberts and Kurtenbach, 1998, p. 211). The
term refers to the activities of different regulatory agencies and, at the same time, the
imposition of constraints on the preparation, content and form of accounting
statements made by bodies other than the preparers of the statements.
The paper aims to understand the potential role of these regulations during Egypt’s
transformation process from the socialist towards the market economies. It draws on
Habermas’ (1975, 1987) notions of “regulative” and “constitutive” steering mechanisms,
within the general skeletal framework advocated by Laughlin (1987, 1995), in order to
explore how EFAR have contributed to Egypt’s societal transformation.
Although several studies adopt Habermas’ notions, they explore the role of
accounting and financial reforms in schools, education and health organizations,
broadly known as not-for-profit organizations, in the UK (Broadbent, 1992; Broadbent
et al., 1991; Laughlin and Broadbent, 1993), New Zealand (Lawrence, 1999) and the
USA (Dillard and Smith, 1999). Yet few studies have drawn upon Habermas’ societal
theory in order to understand the role of financial accounting systems for
profit-seeking public organizations in less developed countries undergoing
transition. Habermas’ theory is seldom applied in less developed countries except
for Al-Angri and Sherer’s (2001) attempt to explore the changes that took place within
audit firms in Saudi Arabia following the implementation of audit quality review
programmes.
Likewise, several studies have investigated the process of setting accounting
regulations in the public sector (Barton, 2005; Baskerville and Newby, 2002; Ryan et al.,
1999, 2000; Chua and Sinclair, 1994; Campbell, 1989). Some of these studies have
discussed the imposition of accrual accounting on public sector organizations (Barton,
2005), while others have investigated the participation of the public sector constituents
in the accounting regulations setting processes (Ryan et al., 1999, 2000; Baskerville and
Newby, 2002). Some scholars examine the role of professional associations in
developing accounting regulations for the public sector (Campbell, 1989; Chua and
Sinclair, 1994; Barton, 2005). Despite these differences, the common feature among
these studies is that they were carried in countries, broadly known as developed
countries, such as Australia (Barton, 2005; Chua and Sinclair, 1994; Ryan et al., 1999,
2000), New Zealand (Baskerville and Newby, 2002) and UK (Broadbent and Laughlin,
2005b; Chow et al., 2007). In contrast, the processes of setting accounting regulations in
less developed countries are explored in the current paper.
Although less developed countries share similar characteristics, they are not
homogeneous in terms of their levels of economic, accounting, and social developments
(Perera, 1989; Chamisa, 2000; Chand, 2005). Each country is unique and Egypt is no
exception. There are various reasons for choosing Egypt for this study. First, Egypt
has experienced a dramatic move towards democracy and transparency over the last
few decades, while at the same time, it has developed domestic financial reporting Financial
regulations similar to International Accounting Standards (IASs). accounting
Second, Egypt is one of the few developing countries that transformed from a
capitalist economy to planned economy, then returning once more to capitalist regulations
economy. These changes have been dynamic, evolving through different professional,
legal, economic and political systems within a framework of continuous governmental
intervention. The transformation of Egypt from one socio-economic regime to another 291
provides a fruitful ground to explore the richness of Habermas’ theory in explaining
the role of financial accounting regulations. Third, the longitudinal period under
investigation offers another opportunity to reveal deeper insights concerning such a
role in a less developed country undergoing transition.
Finally, the EFAR have been the focus of several studies in Egypt. Most of these
studies seem to question the development of these regulations in relation to the
Egyptian economic regime (Abd-Elhay, 1969; Samuels and Oliga;, 1982; Briston and
El-Ashker, 1984; Abd El-Salam and Weetman, 2003; HassabElnaby et al., 2003) while
ignoring the cultural, social and political contexts wherein the accounting regulations
setting process takes place. Others explore the social context of EFAR by drawing on
Foucault’s power/knowledge relations in order to understand events and conditions
surrounding the development of the EFAR (Zerban, 2002), Gray’s (1988) model of
culture in an attempt to understand how IASs are in conflict with Egypt’s socialist
approach (Dahawy et al., 2002) or institutional theory to explain the legitimation
processes behind Egypt adoption of IASs (Hassan, 2008).
This paper extends the previous studies by exploring the role of the EFAR as
institutional steering mechanisms that link the changes in the Egyptian social, political
and economic context to the Egyptian public sector organizations that are undergoing
a privatization process. The paper draws on Habermas’ (1975, 1987) theory of societal
development whereby accounting regulations become either “regulative” or
“constitutive” mechanisms engendering public organizations to change. Accordingly,
the paper contributes in revealing how the EFAR have contributed to the Egyptian
transformation towards a more liberalized economy as will be explained later.
The paper is organized into eight sections. Following this introduction, section two
presents the theoretical framework. Section three discusses the data collection
methods. Section four describes Egypt historical background. Sections 5 and 6 present
the empirical evidence on the changing role of financial accounting regulations
during the Egyptian transformation. The discussion and conclusion are presented in
the last two sections.

2. Theoretical framework
The role of accounting systems in organization and society, wherein these systems
operate, has been the focus of various studies (Watts and Zimmerman, 1978; Hopwood,
1987; Laughlin, 1987; Broadbent and Guthrie, 1992; Miller and O’Leary, 1987; Hopper
and Armstrong, 1991; Covaleski et al., 1993; Belkaoui, 2004, p. 133; Carnegie and
Napier, 1996). Some of these studies depend on neo-classical economic theory whereby
accounting regulations are seen as a set of techniques responding to the business
environment (Solomon, 1983; Cooper and Keim, 1983; Watts and Zimmerman, 1986).
Others use institutional theory or critical theory to explore the complexity of the social
context wherein accounting systems operate while, at the same time, illuminating the
JAOC role of accounting systems during societal transformation (Burchell et al., 1980;
4,3 Hopwood, 1987; Bryer, 1999).
In order to appreciate the contribution of Habermas’ model of societal development
in studying accounting change, this section aims to discuss a number of key
dimensions of the institutional theory to analyze the role of EFAR. Then the section
explores how the use of Habermas’ model of societal development, as advocated by
292 Broadbent et al.(1991; 2001) and Broadbent and Laughlin (2005a), provides a further
development to institutional theory in order to augment the analysis and commentary
on the empirical findings that will be presented later.

2.1 Institutional theory

One of the underlying themes of institutional theory is the question of social
legitimacy. Institutional theorists argue that organizations respond to pressures from
their institutional environments through adopting some practices (like financial
accounting) that are socially accepted as being appropriate, even though those
practices might be inefficient (Meyer and Rowan, 1977; DiMaggio and Powell, 1983).
Another key aspect of institutional theory uses isomorphic mechanisms to explain the
processes behind obtaining social legitimacy (DiMaggio and Powell, 1983).
Isomorphic mechanisms are tools or drivers that explain how and why
organizations, over time, have a tendency to move from diversity to similarity. For
institutional theorists, seeking economic resources and enhancing efficiency, which
they call competitive isomorphism, is not the only driver behind organizations’
compliance with the institutional environment. They argue that obtaining social
legitimacy is an underlying reason behind organizations’ conformity with the
institutional environment.
Institutional theorists distinguish between competitive and institutional types of
isomorphism (DiMaggio and Powell, 1983, p. 150). Competitive isomorphism is
concerned with organizations efficiency and economic survival whereas institutional
isomorphism is concerned with social forces that impose certain pressures to develop
particular practices that are socially accepted. These institutional isomorphic
mechanisms stem from the state, the accounting profession and the process of
adopting best practices applied in other countries. DiMaggio and Powell (1983, p. 146)
distinguish between coercive, normative and mimetic institutional isomorphic
mechanisms that can be seen in conjunction with Habermas’s notions of the role of
law, lifeworld, and reference schema (Power and Laughlin, 1996; Broadbent and
Laughlin, 2005a; Broadbent et al., 2001).
Coercive isomorphism is illustrated by the influence of the state or government
agencies on other organizations through the enactment of legislation (DiMaggio and
Powell, 1983, p. 150). This isomorphic mechanism is highlighted by Habermas’s view
of the role of law in societal steering. Normative isomorphism stems primarily from the
professions. The professional training programs reinforced by university education
and professional associations’ rule of conduct exert institutional pressure to normalize
social practices (like accounting) among different organizations operating in the same
field. They create widely held beliefs that cannot be objectively tested but they are
assumed to be true because they are believed (Scott, 1987). This isomorphic mechanism
is highlighted by Habermas’s notion of societal lifeworld.
 Finally, mimetic isomorphism reflects the desire to mirror others’ practices that are Financial
recognized as both successful and worthy adopting (Scott, 1995, p. 43). DiMaggio and accounting
Powell (1983, p. 151) add that in situations where there are uncertainties about the
proper approach to proceed, it is recommended to seek a successful reference group regulations
and “mimic” their course. Although this isomorphic mechanism is not highlighted in
Habermas’s model of societal development, one can argue that mimetic processes can
take place through sharing the scheme of knowledge and reference schema among 293
members of the social system.
Although various scholars use institutional theory to understand the role of
accounting systems (Covaleski et al., 1993, 1996; Scapens, 1994; Touron, 2005; Lapsley,
1994; Etherington and Richardson, 1994; Abernethy and Chua, 1996; Hoque and Alam,
1999; Fogerty, 1992; Carpenter and Feroz, 2001; Hassan, 2008), they argue that
accounting systems are tools for documenting institutional compliance or, as they
claim, myths that confer external legitimacy but are not necessarily used in decision
making processes. This paper argues that accounting systems have the potential to
constitute the context wherein they operate even though these systems are myths
(Laughlin, 1987; Hopwood, 1990).
There is a possibility that accounting systems are myths but effectively used to
attain social and, probably hidden, political objectives that would be otherwise difficult
to achieve (Mouristen, 1994). Yet few studies explicitly draw upon this potential while
examining the role of external reporting practices in a less developed country
undergoing transition. This paper benefits from Habermas’ (1975, 1987) notion of
‘regulative’ or ‘constitutive’ steering mechanisms in relation to the society’s lifeworld
whereby accounting systems have the potential to contribute to the societal
transformation as explained later in the paper.
Institutional theory stresses the steering processes in which organizational systems
conform to external demands pressured through coercive, normative and mimetic
isomorphic mechanisms. Although the theory highlights the deterministic impact of
isomorphic mechanisms over organizations, it does not clearly explain how
organizations respond to these mechanisms. In other words, the theory stresses the
regulative nature of institutional steering mechanisms in driving organizations to
change rather than showing how these mechanisms constitute organizations’ culture,
scheme of knowledge and identity that Habermas describes as lifeworld.
To this, Habermas’ (1975; 1987) notion of steering mechanisms provides broader
justification through coercion and/or appeals to authority or expertise in relation to the
society’s lifeworld. Habermas’ societal development model sets organizations in a
dynamic social context that recognizes the regulative nature of the steering
mechanisms while maintaining the role of human actors during organizational change
(Broadbent and Laughlin, 2005a, p. 130). This recognition of human actors is not
underscored under the institutional theory framework.
Habermas’ model of societal development interlinks a more ‘macro’ dimension,
looking critically at the nature of different laws and other steering mechanisms
(Broadbent et al., 1991; Laughlin and Broadbent, 1993; Power and Laughlin, 1996;
Lawrence, 1999) to a more ‘micro’ response looking at the effect of the proposed financial
and administrative regulations in terms of actual organizations’ life and people
perceptions (Broadbent, 1992; Richardson et al., 1996; Dillard and Smith, 1999). It allows
a multilevel investigation linking more macro changes to people’s perceptions.
JAOC In this capacity, the paper explores the changes taking place in organizations’ wider
4,3 socio-political contexts in relation to the EFAR as “regulative” or “constitutive” steering
mechanisms.

2.2 Habermas’ societal development model

Although Jurgen Habermas himself has said nothing directly about accounting, his
294 ideas have been influential in studying the social context of accounting. Laughlin
(1987), Broadbent et al. (1991), Power and Laughlin (1992, 1996), Laughlin and
Broadbent (1993), Broadbent and Laughlin (2005) and Laughlin (2007) explore how to
apply Habermas’ notions to study accounting and organizational change. Following
their work, there are three inter-linked components in Habermas’ evolutionary model of
societal development: lifeworld, steering media and system (Figure 1).
For Habermas, lifeworld is the driving force behind society and links to the role that
discourse plays in the evolution of societal development. It is “. . . represented by a
culturally transmitted and linguistically organized stock of interpretive patterns”
which Habermas describes as “culture”, “society” and “personality” spheres. He adds
that these spheres represent the ground of learning, framed experiences and
institutional practices (Habermas, 1987, p. 124). Lifeworld represents reference schema
whereby people experiences are framed and interpreted. It includes three major areas:
valid knowledge, social relationships and personal identity (Power and Laughlin, 1996;
Broadbent et al., 1991; Broadbent and Laughlin, 2005a). It is discursively formed
through communication among members of the social system and represents the
context of the steering media and systems (organizations). In other words, it is the
guide for the design of particular systems (organizations). For Habermas, systems
represent the tangible expression of the more intangible discursively formed lifeworld.

Lifeworld
Knowledge, values, and
norms of stakeholders (i.e.
community and society)

Kick or Jolt through the
imposition of new steering
mechanisms – whether
regulative or constitutive
Steering media
(Steering institutions)
accounting regulations, state
controlling techniques and
accounting profession

Micro system
Figure 1. Public organizations and
Relationship between accountants’ response to new
steering mechanisms accounting regulations
(EFAR) and accountants’
responses
Habermas (1987) argues that steering media emerge in response to developments in the Financial
society’s lifeworld. He adds that when society develops, its lifeworld becomes more accounting
complex and separable from societal systems (organizations) (Habermas, 1987, p. 153).
Since societal systems are the tangible expression of the more intangible discursively
regulations
formed lifeworld, there should be some linkages that align the former to the latter.
Accordingly, Habermas sees steering media as institutional mechanisms that link the
society’s lifeworld to organizations. These mechanisms include elements such as 295
“money and power” concretely represented in and through defined societal
“institutions” (Broadbent et al., 1991, p. 3; Laughlin, 2007). These institutions include
“government, professional and financial institutions” aimed primarily at directing
systems or people’s behaviour. This study is interested in the role of various
institutions such as the accounting profession, the Egyptian capital market authority,
the Ministry of Finance and the state’s central accounting administration and, at the
same time, it pays attention to public organizations and accountants’ responses.
Although Habermas (1996) stresses the role of law as the prime steering medium,
Power and Laughlin (1996) argue that the role of other societal institutions should be
highlighted in order to avoid unnecessary simplifications on the nature of institutional
steering mechanisms. In this regard, Broadbent et al. (1991) do not acknowledge
accounting systems as technical systems that communicate financial information
helping in the allocation of economic resources. Instead, they conceptualize accounting
systems as steering mechanisms linking the society’s lifeworld to the society’s systems
(organizations). While communicating financial information, accounting systems
communicate the society’s values beliefs and knowledge. As an element of
communication, accounting becomes a rhetorical device used by the society’s
members in order to justify/rationalize their actions (Lodh and Garffikin, 1997). This
paper adopts this view of accounting systems.
Systems are “functionally definable, tangible [public, private and voluntary]
organizations held together by steering media grounded in the prevailing lifewolrd
(Broadbent et al., 1991, p. 3). Steering media affect the behaviour of the systems through
steering mechanisms represented in the current study at the macro level by the
accounting regulations, professional accounting requirements and the state’s
accounting and controlling techniques. At the micro level, the paper highlights
organizations and accountants” responses to macro institutional mechanisms ( Figure 1).
Habermas’ (1987) notion of “internal colonization” provides deeper insights to
lifeworld, steering media and systems relationships. According to Habermas, changes
in steering media and systems should be grounded in the transformation of a society’s
lifeworld. If steering media go out of control and do not work in accordance with the
discursive and knowledgeable schema of a society’s lifeworld, systems start to change
in a way that is divorced from the lifeworld’s demands. As these non-grounded
steering media and systems become established, the directionality of influence is
reversed. These steering media, instead of supporting the link between the lifeworld
and systems and making sure that the latter works in accordance to the former, impose
their societal values. Habermas (1987, p. 143) refers to this as “internal colonization of
the lifeworld” that results in an inability to evaluate, question or criticise leading to a
loss of meaning, anomie and schizoid (Richardson et al., 1996; Dillard and Smith, 1999).
JAOC 2.3 Societal steering processes and tensions
4,3 The paper seeks to explore the role of the EFAR as regulative or constitutive steering
mechanisms. The accounting regulations are seen as linkages that hold organizations
to society’s lifeword. Since accounting regulations are the product of various activities
performed by different agencies such as the capital market, the accountancy profession
and other regulators (Broadbent and Laughlin, 2005b; Kwok and Sharp, 2005, p. 75;
296 Laughlin, 2007, p. 278), the relative power of whoever involved in the regulations’
setting process will influence the nature of these steering mechanisms (the accounting
regulations). These agencies constitute what Broadbent and Laughlin (2005a; b)
call government and legal ‘institutions’ (see also Broadbent et al., 1991, p. 7).
Broadbent et al. (1991, p. 7) add that each of these “institutions” could have its own
lifeworld and steering media that guide organizations’ behaviour. For example,
governments enact legislation in order to steer organizations, especially when these
organizations are not working in accordance with the society’s lifeworld (Broadbent
and Laughlin, 2005b). Likewise, professional institutions pass codes to guide
organizations’ behaviour in line with the prevailing lifeworld. Alternatively,
these institutions may develop steering media that direct organizations away from
the society’s lifeworld in order to engender those organizations to change.
Governments and other “institutions” may use different steering mechanisms (like
accounting regulations) in order to induce, or as Laughlin (1987) argues kick, systems
to change in accordance with certain scheme of knowledge, values or norms
(Broadbent et al., 1991; Broadbent and Laughlin, 2005b, p. 210) (Figure 1). When the
developed steering media induce organizations to change away from the discursively
agreed lifeworld in which they are grounded, they start what Habermas (1987) refers to
as the “internal colonization of the lifeworld”.
Following Habermas’ societal development model (Figure 1), the relationship
between societal “institutions” and organizations in relation to society’s lifeworld
reveals the role of the EFAR as steering mechanisms. For Habermas, steering media
could be regulative or constitutive. Regulative mechanisms are rooted in the lifeworld
with an aim to regulate some pre-existing ongoing activities and thus can be justified
(Broadbent et al., 1991). They are founded in the lifeworld’s values, norms and
rationalisations in ways that conditioning the organizations’ actions in accordance
with the prevailing values and norms. They are also subject to criticisms and
modifications.
In contrast, if steering mechanisms break out of the society’s lifeworld demands and
drive changes in the lifeworld through controlling societal systems (organizations),
then these mechanisms become constitutive leading to what Habermas describes as the
“internal colonization of the lifeworld”. They constitute some form of legitimate
activities through the support of politicians (Broadbent et al., 1991; Broadbent, 1992).
Constitutive mechanisms are justified through coercion and/or appeals to the authority
or expertise in ways that do not consider human values and norms. The justifications
for these mechanisms are not open to debate.
The role of accounting systems, whether regulative or constitutive, depends on the
manner in which these systems were exercised, the time period considered and the
level at which investigation is being undertaken (Broadbent et al., 1991, p. 9; Power and
Laughlin, 1992, p. 126; Dillard and Smith, 1999). In this capacity, this paper explores
the role of financial accounting regulations, as steering media, to direct public sector Financial
organizations during the Egyptian transformation towards a market-based economy. accounting
Following Habermas’ societal development model (Figure 1), it is possible that
societal steering institutions either cooperate or contradict during the accounting regulations
regulations setting processes. This may happen since each institution could have its
own lifeworld and steering media. As long as steering media are the product of various
institutions, a conflict or a tension between these institutions may arise from the need 297
to legitimate their activities and secure their positions. The tension arises as some
institutions suffer the loss of their self-regulation in comparison to other institutions.
Such a decline in self-regulatory power will be a source of tension or conflict.
The empirical findings illustrate that Egypt has three different kinds of accounting
regulations though similar to the IASs. One is issued by the accounting profession,
while the other by the ECM (Ministry of Economic Affairs) whereas the third is issued
by the Central Accounting Administration known as public auditing organization.
It seems that these institutions aim at legitimating their activities and securing their
self-regulation positions. In fact, each institution was seeking to have the privilege of
undertaking the process of developing the accounting regulations during Egypt’s
transitional process.

3. Data collection methods

The study stresses the value of the social context wherein accounting systems operate
and seeks a deeper understanding of the role of EFAR during the Egyptian
transformation towards a market-based economy. It adopts a triangulation approach
for data collection. Triangulating data, through the use of multiple sources,
corroborates evidence (Scapens, 1990, p. 275) while, at the same time, providing a
broader explanation of the research issues. Documents and semi-structured interviews
were the main sources of data.
Documentation includes an analysis of legislations and an examination of
newspaper reports and academic articles. To achieve a better understanding of the
research issues, semi-structured interviews were carried out. The interviews lasted for
an average of about 40 minuets with each participant. In order to obtain as diverse a
range of views as possible, the participants included academics, professionals and
managers. Notes were taken during the interviews, as tape recording was not
permitted. A total of 12 individuals were formally interviewed. The criteria for the
selection of these interviewees required them to be: working in an Egyptian
environment for almost 15 years and they must be, to a more or less extent, involved in
the use or the development of financial accounting regulations in Egypt. Fortunately,
three of such interviewees were academics working as members of the accounting
profession, the Central Accounting Administration (CAA) and the Egyptian Capital
Market (ECM) technical committees that are responsible for improving accounting
regulations in Egypt.
Interviews were semi-structured allowing interviewees to provide their views
through a free-flowing discussion. The main research questions are summarized in
Appendix. The questions are contextually oriented and help to flesh out Habermas’
societal development model (Laughlin, 1995) in an attempt to explore whether the
EFAR played a regulative or a constitutive role during the Egyptian transformation.
Interviewees’ responses highlight deeper insights related to the tension between
JAOC societal steering institutions during developing the EFAR as will be explained in the
4,3 empirical part of the study.

4. Historical background
Egypt has a historical nature that makes centralization deeply embedded in the
country’s lifeworld. Throughout Egypt’s history, the River Nile represented one of the
298 main economic resources. As an agriculture-based economy, the River Nile water
supply was essential to irrigate Egypt’s agriculture land. The importance of the Nile’s
water urged the need to centrally control the supply of water (Shahin and Wright,
2004). One person – the Pharaoh – assisted by a top executive controlled Egypt’s
resources including the supply of water. Likewise, under the Arab Islamic rule, Egypt
was controlled by one person – The Wali. The government was highly centralized
with all authority in the hands of the Wali (Ayubi, 1989).
Egypt is an Arab country located in the North of Africa in the Middle East. It has
the Arab families’ traditions that incorporate a tendency towards centralization. In
Arab countries and Egypt is no exception, a person – the father – centrally takes care
of the family. The father has a complete authority over his family and usually takes all
decisions (Shahin and Wright, 2004). Abdel Halim (2004, p. 2) argues that:
Egyptian culture reflects a clear tendency toward centralized decision-making [. . .]. This
cultural effect still exists in the minds of many citizens despite a recent increase in freedom
and relative democratization.
From the 16th century, Egypt was centrally controlled by the Ottoman Empire. Two
hundred years later, Mohamed Ali, an Albanian officer in the Ottoman Empire army,
took over the power and declared Egypt as an independent province. Mohamed Ali,
known as the ruler of modern Egypt, centrally took various decisions to modernize
Egypt. He oriented the Egyptian economy towards cotton production since British
textile manufacturers, at that time, were willing to pay good money for such cotton. He
also strengthened Egypt infrastructure by establishing educational institutions, roads,
canals, factories and military forces (Country Profile: Egypt, 2006).
After the rule of Mohamed Ali, Egypt witnessed several changes that reinforced
centralization in the country’s lifeworld. The first was in 1914 when Egypt became a
British colony. The second was in 1952 when President Abd El-Nasser took over the
power and introduced his socialist vision. The third was in 1974 when President Sadat
introduced his political agenda known as “open door policy”. These continuous
changes led McDermott (1988) to use the term “flawed revolutions” as a series of
socio-political regimes changed the nation politics without consulting the people.
In 1914 Egypt became a British colony and Great Britain had effectively control of
the Egyptian economy. Accordingly, Egypt’s economic system had the characteristics
of a capitalist economy that emphasized the establishment of class-based society in
which people are divided on the basis of their properties (Samuels and Oliga, 1982,
p. 82; Abd El-Salam, 1998, p. 629). The role of the capital market, established in 1903
(Ali El-Dean, 2002, p. 38), has been highly significant, especially for cotton trading that
represented the major and most strategic product of Egypt.
Between the start of the British colonial period in 1914 and the introduction of the
socialist vision by Abd El-Nasser in 1952, civil society organizations, mainly
professional syndicates, demanded the modernization of the country’s legal, political
and economic systems. However, these demands had not been met. Ottaway (2003, Financial
p. 33) argues that civil society organizations consisted of elite and highly educated accounting
members. He adds that those members’ modernization agenda came about without
allowing society’s citizens to participate in the formulation of that agenda. regulations
Accordingly, civil organizations were incapable of bringing a change to the society
as whole because they did not, as Ottaway (2003, p. 34) argues, penetrate society.
Instead, they were thinking about the interests of society rather than allowing the 299
society’s members to express their own preferences. One can argue that during
the colonial period a centralized top-down approach to change existed in Egypt; this
approach became an embedded feature of successor regimes. These regimes, the state
or the government, plan for and/or direct the Egyptians rather than allowing them to
participate.
In Egypt, the first coherent accounting rules emerged as a result of two pieces of
legislation (the Commerce legislation of 1883 and the Tax law of 1939). Both required
organizations to extract their final accounts and balance sheets from “properly kept
books” following accepted accounting conventions (Briston and El-Ashker, 1984,
p. 130). The Egyptian accounting profession, founded in 1946 as a private independent
regulatory body, played a major role in developing the accepted accounting
conventions.
The profession did not only aim at developing accounting conventions but also at
raising the deteriorating level of accounting and auditing professionalism in Egypt
(Briston and El-Ashker, 1984, p. 130). In its attempt to develop accounting regulations
and professionalism, members of the Egyptian accounting profession followed the
patterns of UK educational and professional organizations. Members received
their educational and training courses in UK institutions, then following their return
they kept regular contacts with these institutions. Afterwards, these members became
responsible for drafting the Charter of the Egyptian accounting profession as well as
developing the accepted accounting conventions in Egypt (Amer and Khairy, 1979;
Samuels and Oliga, 1982, p. 83; Abd El-Salam, 1998, p. 629; Rahman et al., 2002, p. 4).
Throughout Egypt’s history, several influences directly and indirectly shaped the
EFAR and disclosure requirements. Direct legislation includes the Accounting Practice
Law 133 of 1951 that governs professional accountants, The Central Accounting
Agency Charter of, 1966 that regulates the process of preparing and auditing the
financial statements of any state-owned organization, Company Law 159 of, 1981 that
requires private companies’ managers to prepare certain financial statements in certain
formats, the Capital Market Law 95 of, 1992, Ministerial Decree (head of Central
Accounting Agency) of 1996 and the Ministerial Decree (Ministry of Economic Affairs)
503 of 1997. The last three enforced the application of IASs. Indirect legislation
includes the Arab and Foreign Funds and Free Zones Law 32 of, 1977 that encourages
private sector initiatives in Egypt and the Public Business Sector Law 203 of, 1991 that
allows the privatization of state-owned organizations.
Each of these laws has its Executive Regulations. Executive regulations do not
amend, add, or delete any provision in the legislation, instead, they set out matters and
details of implementation (Ali El-Dean, 2002). The following sections critically review
these legislations and, at the same time, explain how they have contributed to the
Egyptian transformation towards a market-based economy.
JAOC 5. The socialist legacy: Egypt’s lifeworld
4,3 In 1952, Egyptians revolted to end the British colonialism and an Egyptian
government was established with a centrally planned economy. There had been a
major governmental intervention to move the Egyptian legal, political and social
institutions towards a socialist regime. The state’s socialist vision was: first, to achieve
political independence through removing the domination of foreign investors on major
300 business sectors, second, to guarantee economic development through the government
planning and controlling of the use of economic resources, and finally to achieve social
well-being by redistributing resources equally among Egyptian citizens. The state, in
the form of the government of that day, aimed at discrediting the capitalist system in
terms of its exploitation of the nation’s economic resources (Amer and Khairy, 1979,
p. 312; Hopwood, 1982, p. 99).
As a part of enforcing the state’s vision, the government nationalized the Suez Canal
along with the British and French companies in 1956, the Misr Bank in 1957 and, at the
same time, passed Act 161 of 1957 to regulate the ECM (Darwish, 1997, p. 48). In 1961,
the ownership of more than 50 per cent of private investments were under the control
of the public policy administration and thus the public sector emerged as the dominant
sector (Amer, 1969, p. 50; Hopwood, 1982, p. 130), leading HassabElnaby and
Mosebach (2005, p. 21) to state “The Egyptian government seized almost every
Egyptian company of significance including banks” and therefore the public sector
companies operated as near monopolies (Hindy, 1995 cited in Younis, 1996, p. 20). The
following subsections illustrate how EFAR steered public organizations during that
socialist regime.

5.1 Financial and administrative institutions

The government enacted several laws to bring financial disclosures under legal and
administrative control (Gamal, 2002). The laws amended all major systems, including
accounting, to correspond to the state’s central planning philosophy. Accordingly, the
EFAR became uniformly applied to Egyptian public organizations. In 1966, an
independent public organization was established, called Central Accounting
Administration (CAA), and appeared to be responsible for developing, implementing
and auditing the financial disclosure regulations.
The preface of the CAA regulations shows that various members from different
Egyptian Ministries participated in developing the uniform EFAR (Unified Accounting
System, 1966). However, no representative of the accounting profession participated
and Zerban (2002) argues that the need to create a unified accounting system and
regulations emanated basically from the state and the profession was just a supporter
to the state desires.
The CCA instructions enforced public organizations to use a uniform book-keeping
system and a certain chart of accounts. These instructions gave descriptions of
accounts and sub-accounts that are used to register different transactions of all
economic organizations under public ownership. The CAA gave a detailed description
of; firstly, how the EFAR should operate, secondly, the accounting terminologies and
policies used in the preparation of financial statements and, finally, the classification of
financial resources and the uses of these resources. One of the interviewees said:
 These unified accounting systems were the first organised systems introduced in Egypt. Financial
They included a framework for terminologies, techniques and formats that had not existed
before (Member in the CAA). accounting
regulations
The CAA’s main objectives, as shown in its charter, were to:
Achieve control over the state fund, fund of public entities, and funds of any other bodies
mentioned in its law. This organization (i.e. CAA) shall help the People’s Assembly perform 301
its controlling role as stipulated in law (Unified Accounting System, 1966).
The accounting regulations became concerned with “how public funds are used” in
accordance with the state laws (Briston and El-Ashker, 1984). They aimed at fulfilling
some general policies such as measuring the national income, improving living
standards and achieving more economic self-sufficiency (Samuels and Oliga, 1982).
They were very detailed and control oriented as is the case of all countries with
centrally planned economies (Bailey, 1988; Jaruga, 1996; Bourmistrov and Mellemivik,
1998). The EFAR focused more on the government’s demand for information, as the
uniformity was not due to the need of a consistent disclosure. As Briston and
El-Ashker (1984, p. 135) comment:
The reason [. . .] was the government dependence on the accounting system as an information
tool to plan and control economic activities.
Financial accounting regulations played a central role in the government’s socialist
policy. They were designed to provide the Ministry of Planning, the Ministry of
Finance and banks with a flow of information to assist in the process of central
planning and control, leading Abdel-Khalik (1966) to argue that accountants and
accounting become a part of “controllership function in Egypt”. Public organizations
had to submit a regular flow of information regarding various aspects of their activities
to the previously mentioned financial institutions. In turn, these institutions issued
various decrees and regulations in order to bring organizations into line with the state’s
socialist vision.
Furthermore, one of the consequences of the socialist regime was that the ECM
“continued to exist, but with virtually no activities” (Darwish, 1997, p. 48); it was an
unorganized market for buying and selling securities and had become “a symbol of the
capitalist regime that has to be discredited” (Zohny, 2000, p. 7). The government has
carried the responsibility of funding all economic activities deemed necessary for social
and economic development, except for very few corporations, or as Zohny (2000)
mentions “only nine corporations” operate through the capital market.

5.2 Accounting profession and research

The changes in the Egyptian socio-economic regime led to dramatic changes in the
accounting profession, particularly after establishing the CAA. Foreign accounting
firms existing in Egypt were impeded. Accordingly, the number of professional
accountants in Egypt was enormously reduced (Briston and El-Ashker, 1984, p. 148;
Zerban, 2002), though a few accepted to work in the CAA as state employees (Amer,
1969, p. 51; Amer and Khairy, 1979, p. 312). Although members of the CAA had to
perform the duties of independent professional accountants, they were employed by
the government as monthly salaried employees.
JAOC Accordingly, most of the Egyptian professional accountants came under state
4,3 control. Their job was to monitor compliance with the matters specified in financial
regulations and laws rather then exercising professional judgements (Xiao et al., 2004;
Chanchani and Willett, 2004), which led Renshall (1981, p. 20) to stress that:
The nationalisation programme is said to have put the accounting profession to sleep from
1961.
302
In this regard, Youssef (2003, p. 1) argues that “The government (state or bureaucracy
used interchangeably) assumed full responsibility for the society at large. Different
stakeholders had no role because the government was the sole arbitrator of their
conflicting claims” and the accounting profession is no exception. The accounting
profession became a powerless stakeholder and professional recommendations and
accounting research focused more on the technical aspects of designing new
accounting systems and the applicability and the flexibility of these systems in serving
central planning requirements (Amer and Khairy, 1979, p. 319). Hergreaves (2001,
p. 249) argues that the socialist regime seized the power of different stakeholders and
created a situation in which education and research became “a tool to disseminate the
ideals of socialism. The aim of education was indirectly to service the state”.
The silence of professionals played a significant role in steering accountants’
conduct. Similar to other Egyptian professions such as lawyers, doctors and engineers,
one can speculate that the Egyptian accounting profession had some requirements that
were centrally refused by the state (Krause, 2001). Nevertheless, this passive existence
communicates certain set of values and norms in accordance with the state’s socialist
regime. These norms, Dahawy et al. (2002) argue, are those of a socialist countries’
culture wherein central legal control, avoiding conflict and system uniformity prevail.
Accounting, as an institutional steering mechanism, was rooted in the Egyptian
socialist lifeworld. Financial accounting systems become regulative mechanisms that
direct organizations and accountants in line with Egypt’s socialist vision. Unless
transformation changes these established values and norms, the introduction of new
financial accounting regulations might have a constitutive role whereby organizations
comply, without necessarily have their lifworld changed. In this situation, new
accounting regulations are expected to have a colonization tendency. Whether the new
regulations will have a colonization tendency or otherwise depends on the context of
study. The following section illustrates the role of EFAR during the Egyptian
transformation.

6. The Egyptian transition: the kick(s)

The early years of the 1970s witnessed a change in the state philosophy towards
opening up the Egyptian economy and encouraging the private sector. Egypt had
started a transformational process towards a more liberalized economy. In 1974, the
Egyptian government passed law 43 that introduced a political philosophy known as
the “open door policy”. In 1975, the central bank and banking system were reorganized
to encourage both domestic and international private investors. The policy involved
dismantling import controls, removing pricing regulations, relaxing restrictions on
possessions and developing the private sector (Messallam, 1998). Policy aimed to
encourage private sector initiatives as well to improve international foreign relations in
order to promote technology and attract foreign capital (Darwish, 1997).
 Despite the changes that resulted from the open door policy, state intervention Financial
remained (Ellithy and Nixson, 1998, p. 194). The public sector continued to be the prime accounting
investor in the Egyptian economy during the 1980s. Ayubi (1989, p. 65) states that:
regulations
[The Egyptian] bureaucracy has continued [. . .] during the open door policy expansion has
been more remarkable in areas related to state control.
In the absence of significant private capital participation in the economy and a 303
government budget surplus, Egypt had to rely on the continuous flows of foreign
subsidy (Zetter and Hamza, 1997, p. 154). In 1987, the government signed an agreement
with both the International Monetary Fund (IMF) and the World Bank (WB) to
guarantee the supply of required economic resources (Richards, 1991). A few years
later, Egypt subscribed to another agreement with the USAID to finance some projects
including technical assistance programs (Momani, 2003, p. 88). The government agreed
to take further steps towards the development of market economy institutions. Zaki
(2001, p. 1867) states:
Since the end of the 1973 until the more recent 1991 Fund-sponsored programme, Egypt had
been making limited progress in moving from a centrally planned, public sector dominated
economy toward a market-based one in which the private sector is to play the leading role in
propelling a more rapid and sustained growth.
The WB has recommended the privatization of public sector organizations as the
transformation of ownership to the private sector would generate more economic
resources. The WB also urged Egypt to strengthen its capital market while linking it to
international capital markets (Zohny, 2000, p. 7).
Accordingly, the government has taken more effective steps to liberalize its
economy and reduce state intervention in the business sector (McDermott, 1988). In
1991, Egypt passed law 203 that permitted the privatization of public sector
organizations. This law has encouraged the financial and administrative restructuring
of public organizations (Youssef, 1996, 2003; Younis, 1996). In this highly political
context, financial regulations and legislation have changed. The following sections
describes how the changes in EFAR, as steering mechanisms, took place along with the
process of liberalization that started at the beginning of 1974.

6.1 Financial and administrative institutions

After the enactment of the open door policy, the government passed the Foreign
Investment and Free Zones Law in 1977. This provided investment incentives through
taxation and customs exemptions. It was aimed at encouraging the private sector in the
form of joint-ventures with domestic, Arab and foreign investors. In 1979, a
Presidential Decree No. 520 was issued to reactivate the ECM after a long period of
state hegemony and control over the financial market. The Decree aimed at
establishing the General Authority of a Capital Market responsible for developing,
organizing and controlling the Egyptian capital market operations (Messallam, 1998,
p. 25).
In 1981, the government passed the Company Act 159 that allowed the
establishment of private joint stock companies, partnerships limited by shares and
limited liability companies. The Act required only private sector companies to prepare
their financial statements in accordance with certain requirements that differ from
those of the CAA. However, the Act did not address public sector organizations and
JAOC therefore these organizations continued to comply with the 1960s unified accounting
4,3 regulations and the CAA requirements. Gamal (2002) states that:
The unified accounting system, designed in the 1960s, mainly for public sector, was not
radically altered until the late 1990s.
In the late of 1980s, some members of the ECM authority attended the US Seventh
304 Annual International Institute Training Programmes. The programmes were aimed at
helping the ECM regulators understand how to develop an appropriate regulatory
framework suitable for the ECM (Zohny, 2000, p. 22) and were funded by the US
government. These training programmes enhanced the Egyptian regulators’
knowledge concerning types of securities, how to promote investors’ confidence and
other regulations that resemble the “international market practices” including the
IASs. Accordingly, the ECM regulators have introduced some measures to bring the
Egyptian market closer to international standards and enforced the application of
IASs.
In 1992, the ECM laws (Law No. 95) forced joint stock companies and partnerships
limited by shares to prepare their financial statements in accordance with IASs[1].
These laws were fundamental to the reform of the rules governing the ECM and
improved accounting and financial disclosure on the basis of what Zohny (2000, p. 14)
calls international norms. One of the interviewees mentioned that:
In our country, where we are lacking the spirit of accounting professionalism, law
enforcement is the only mechanism for applying any accounting standards (Professional
Accountant).
Nevertheless, the multiplicity of laws that govern financial reporting led to a duality of
disclosure requirements in Egypt. On one hand, private sector organizations, operating
under the company Act 159 of 1981, were obliged to comply with financial reporting
requirements of that Act. However, when such companies issued securities for public
subscription, they were required to comply with the ECM disclosure requirements that
correspond to IASs.
Privatized organizations (formerly public organizations), governed by law 203, were
obliged to comply with the CAA and the unified accounting system’s requirements.
However, when such organizations issued securities for public subscription, they were
required to comply with the ECM disclosure requirements in accordance with the IASs.
One of the professional accountants mentioned the following:
The practice of accounting whether unified accounting requirements, international standards
requirements or the Egyptian standards is mainly based on the idea of debit and credit – so
what are the differences? Probably they differ in the financial statement presentation
requirements (Professional Accountant).
This shows how professional accountants take notice of matters specified by laws and
regulations and, at the same time, confirms Dahawy et al. (2002, p. 211) statement that:
The Egyptian unified accounting system offered detailed rules on how to record accounting
transactions and prepare financial statements. Accountants were technicians who applied the
rules.
6.2 Accounting profession and research Financial
After the introduction of the open door policy, the Egyptian accountancy profession accounting
flourished. Foreign and the domestic private enterprises requested an independent
audit instead of government auditing. A professional accountant said: regulations
Egypt has two accountancy professions; one for the private sector that emerged after the open
door policy, and another for public sector that is regulated by the CAA (Professional
Accountant and Academic). 305
In the early of 1980s, the accounting profession, founded in 1946 as a private
independent organization, organized international conferences in accounting and
auditing (Samuels and Oliga, 1982). These conferences recommended the constructing
of an independent committee to establish Egyptian accounting and auditing standards
in accordance with the IASs (Samuels and Oliga, 1982; Abd El-Salam, 1998). A few
years later the profession agreed to receive financial and technical aid from the US
government (Hegazy, 2004) to create the “Egyptian Institute of Accountants and
Auditors” that became responsible for developing the Egyptian Accounting Standards
(EAS).
In 1992, the profession issued the EASs that were essentially an Arabic version of
the IASs. The preface of the Egyptian standards states that “The EAS have been
prepared to comply with the IASs issued by the International Accounting Standards
Committee (IASC) except for certain minor differences to adapt the Standards to the
Egyptian economic environment” (IFAC). The accounting profession and Egyptian
academics criticized the late 1960s accounting regulations and encouraged the
adoption of the IASs. One of the interviewees mentioned the following:
The IASs is a necessity to move towards a capitalist economy and to encourage the flow of
foreign capital to invest in Egypt. The IASs meant to make foreign investors understand the
Egyptian business operations’ results and therefore increase their confidence in the Egyptian
economy (Professional Accountant and Academic).
The IASs became a significant tool to facilitate the transformation process from
socialism to capitalism. Sami (2000) argues “poor accounting standards inevitably
impact negatively on the stock market” and therefore suggested the use of the IASs to
internationalize the ECM. In the same vein, while investigating how the IASs were in
conflict with the Egyptian socialist culture, Dahawy et al. (2002, p. 204) emphasized
that:
[Disclosure] is a key component of IAS reporting requirements. The transition from a
centralized economy, characterised by secrecy, to a market economy characterised by full
disclosure, requires a fundamental shift [. . .] that IASs can facilitate.
Despite such importance, public organizations continued to use the 1960 s unified
accounting systems. One of the practitioners in a public organization stated that:
As long as there was no legal requirement to apply the IASs in preparing the financial
reports, why should we (i.e. the public organization) apply them? We only prepare them when
we have to get listed in the ECM (Financial Manger in a former public organization).
Consequently, the Egyptian public auditing profession (the CAA) legally enforced the
application of the IASs in public organizations. The head of the CAA issued a Decree
in 1996 to harmonize the 1960 s unified accounting system with that of the IASs
JAOC (Elwakae El-Masria, 1996). The Decree required the use of the IASs as a supplementary
4,3 framework and permitted the use of certain IASs for matters that have no stated
standards in the 1960 s regulations.

7. Discussion and analysis: steering media role, cooperation and tensions

306 For institutional theorists, accounting systems are tools to obtain social legitimacy and
therefore these systems are either myths or otherwise effectively used in
decision-making. The contribution of Habermas’ critical understanding of legitimacy
and/or justifications lies in his stress on the political influence in societies in transition.
In their attempt to fulfil the demands of social change, governments, regulatory
agencies and constituents may have to make decisions that lack rationality from the
perspective of those involved in the transformation processes. This lack of rationality
makes accounting systems have a constitutive role while helping in engendering the
transformation as explained earlier.
The Egyptian regulatory agencies, mainly, the ECM authority, the accounting
profession and the CAA seem to prefer the adoption of international accounting
practices instead of developing domestic accounting regulations. One of the
interviewees said:
On one hand, we had to change the old accounting practices given the changes in the
economic climate. On the other hand, when we wanted to engender a change, however, it
appears that there is no domestic individual users demand for specific information. The three
Egyptian reference groups are: tax department that follows certain tax accounting rules,
Banks that have their own ways to grant loans and domestic individual investors in an
emerging capital market. Consequently, we had to rely on the available international
standards as a reference to develop our own domestic ones (Academic and Member in the
ECM technical committees).
The Egyptian agencies worked towards the development of better accounting
regulations suitable for the transformation from socialism to liberalism. As such, new
accounting regulations, mainly IASs, emerged as institutional steering mechanisms
contributing to the transitional process. These mechanisms are justified through state
coercion with an appeal to the professional authority or expertise in ways that do not
consider the pre-existing lifeworld, instead they reformed Egypt’s socialist lifeworld.
The mechanisms communicated and, at the same time, imposed a new set of values
and norms contrary to Egypt’s socialist lifeworld.
During Egypt’s transformation process towards a market-based economy, three
descriptions of accounting standards have been introduced. These descriptions are
similar to the IASs, yet they are not their mirror. They are expressed in the following:
First, a translated description, issued by the accounting profession in 1992, that
included a list of technical standards less than those published in the IASs
(Abd El-Salam, 1998). Second, the ECM legally enforced the application of another
translated description, enacted in 1992 and amended by Ministry of Economy in 1997,
that included a complete list of technical standards as shown in the IASs. Finally, a
mixed description, issued by the CAA in 1996, that included the 1960 s unified
accounting regulations brought harmonization with IASs. In fact, the CAA legally
enforced state-owned enterprises to use this mixed description in preparing their
financial reports (Salem, 2001).
 Despite legal enforcement and professional requirements, or, as Habermas (1975; Financial
1984) calls them, justifications through coercion and/or appeals to the authority or accounting
expertise, it is noted that “while decrees formulated require Egyptian enterprises to
adopt IASs, this has not yet been done as almost all enterprises lack the wherewithal to regulations
convert their current systems to the international standards” (Abdel-Razek, 1999). The
existence of three descriptions has given businesses managers the discretion to choose
that which suits them. Business managers have discretion since the independent local 307
auditors’ report is required to state that the financial statements were prepared in
accordance with Generally Accepted Accounting Principles (GAAP) without giving
explanations of what exactly GAAP means (Wahdan et al., 2005). As one of the
interviewees explained:
The standards are flexible as including different accounting methods for each element. This
flexibility allows public organizations to choose methods that are similar to those existing in
the unified accounting system. It also allows private organizations to choose methods that are
similar to those that are being applied. The only difference is in the form of the published
reports rather than in policies behind these reports (Financial Manager).
It seems that the development of regulations was not entirely to improve financial
reporting and disclosure in Egypt, but also to serve other social and political objectives
that were deemed important by the Egyptian regulatory agencies during the Egyptian
transitional processes. The regulations aimed at serving the Egyptian transformation.
Since the IASs emphasise both full disclosure and the use of different alternatives to
measure and classify transactions, they contribute to wider social changes involving
more transparency, democracy and flexibility. The adoption of new reporting
regulations, such as the IASs for newly privatised organizations (formerly public
organizations) would increase organizational members’ adherence to liberalization and
privatization processes, or as Sami (2001) argues:
[. . .] in mobilizing public support to Egypt new economic era [. . .] [various parties] should
ensure that whoever is contracted behaves in accordance with the IASs and operates without
undue political interference.
Furthermore, the new financial accounting regulations gave visibility to some less
tangible elements such as the accountants’ reference scheme (Hopwood, 1990;
Laughlin, 1991; Broadbent, 1992). As a result of the long period under the socialist
regime, Egyptian accountants were concerned only with issues specified by laws rather
than with exercising professional judgement. Accordingly, the Egyptian regulatory
agencies sought to overcome the well-established statutory control, or as Yousef (1996,
p. 94) argues the “persistence on old practices”, inherited from the socialist regime,
while imposing a new way for practicing accounting in Egypt. The new regulations
improved accounting practice and, at the same time, increased financial transparency.
Dahawy et al. (2002, p. 211) argues that:
The adoption of IASs constitutes a radical change in Egypt, where accounting was regulated
by the Egyptian Unified Accounting System [. . .] The IASs require Egyptian accountants to
exercise professional judgement and increase transparency.
The empirical findings show that responsibility for developing financial accounting
regulations was divided between the ECM, the CAA and the Egyptian accounting
profession; each developed a different description of the EFAR. As a result of this
JAOC fragmentation, three descriptions of accounting regulations have emerged and
4,3 provided three different levels of harmonization ranging from a complete adoption of
the IASs to an adoption accompanied by various modifications. Although the existence
of the three descriptions have helped to incorporate variations in the Egyptian cultural,
social, political, legal and economic systems that are in transition, it also shows that the
new accounting regulations are not grounded in an established market oriented
308 lifeworld.
Despite the differences among these three accounting descriptions, they
communicate one message that is best expressed in the following opinion:
At the moment there are various accounting regulations, but the country is moving towards
the market economy and therefore all regulations – whether for public or private
organizations – will be in line with IASs (Professional Accountant and Academic).
One can argue that behind the enforcement of the new accounting regulations is an
attempt to replace old norms, values, regulations and knowledge that Gamal (2002)
argues “are not market oriented”. Furthermore, the Egyptian regulatory agencies
sought to improve relations with the international capital markets, participate in the
“global” economy and secure a continuous follow of foreign investments funds. Sami
(2000) considers that:
In our keenness to become part of the global financial system there must be a realisation that
the world’s major accountancy firms are working towards an internationalisation of
accounting standards, largely through bodies such as the International Accounting
Standards Committee.
Although the agencies enforced the new regulations to achieve certain social and
political targets, they might also have personal desires in terms of legitimating their
position as well as their roles in developing accounting regulations. One of the
interviewees commented:
In my opinion, it would be much better to assign the responsibility of setting accounting
standards to the prime minister. There are some disputes among the CAA, the ECM and
the accounting profession. For example, the CAA chairman is not convinced with the
enforcement of the ECM description of the accounting standards and vice versa. These
conflicts can only be resolved through the prime ministry authority whereby both institutions
will have to comply (Professional accountant: Member of ECM and CAA).
Another professional accountant expressed the following opinion:
In order to avoid any dispute, Egypt has to have a separate independent institution
responsible for developing accounting standards instead of putting such a responsibility on
the hands of a fragile profession and Ministerial decrees.
In fact, one can argue that the accounting profession, the CAA and the ECM, known as
the Egyptian accountancy bodies, were aiming at enhancing and legitimating their
professional status during the Egyptian transitional processes. Accordingly, they have
adopted and promoted the IASs as a satisfactory framework to guarantee the quality of
their final product, the financial reporting regulations (Chand, 2005). Any failure to
achieve this might distort each institution self-regulatory power during Egypt
transitional processes.
8. Conclusion Financial
Drawing on Habermas’ (1975, 1987) notions of lifeworld, “regulative” and/or accounting
“constitutive” steering mechanisms and systems, the paper has provided insights
that otherwise might not have been uncovered. The findings counter the claims of regulations
Solomon (1983) and Cooper and Kim (1983) that financial accounting regulations
emerge and change systematically in response to the changes in financial statements
users’ needs. The empirical findings suggest that despite the change the Egyptian 309
business environment, the new regulations are not entirely to improve financial
disclosure or to fulfil users’ needs in Egypt. The Egyptian regulatory agencies acted
upon these new regulations in order to trigger organizations to change while colonizing
accountants’ thoughts, values and norms and, at the same time, raise their
professionalism and adherence to liberalization and privatization processes.
Like other socialist countries in transition such as China (Xiao et al., 2004), the
Egyptian political, economic and social agencies become active in developing financial
accounting regulations in harmony with the IASs. Although both Egypt and China
have a strong public ownership, a fragile accounting profession and an immature
capital market, China has developed accounting standards, similar to IASs, that
“co-exist” with the China Unified Accounting System (Xiao et al., 2004). However,
Egypt has developed three descriptions of accounting standards which are similar to
IASs but include some adaptations.
Similarly, in their investigation of the changes that took place within Saudi audit
firms following to the implementation of quality review programmes, Al-Angari and
Sherer (2001) conclude that those programmes have affected the core activities of audit
firms and, at the same time, colonized auditors’ values and thoughts. Although, the
current paper has a similar conclusion to the role of financial accounting regulations
during the Egyptian transformation, it does not investigate the way in which the IASs
are used at micro organizational level. The paper locates the Egyptian case around
Haberams’ societal development model developed and advocated by Laughlin (1987),
Broadbent and Laughlin (2005a, b) and Broadbent et al. (1991). Accordingly, further
research is required to investigate the role of IASs within a single organization
conceptualised as interpretive schemes, design archetype and subsystems where
Laughlin’s (1991) models of change can be utilized.
While Habermas’ model of societal development provides deeper insights to
understand organizational change, the model is not without some theoretical and
practical problems. One is the definition of the lifeworld, steering media and systems
(Power and Laughlin, 1996). Sometime, these concepts are sliding and slipping together
making it difficult to apply the model to explain the case under investigation.
Therefore, the paper analytically distinguishes between these concepts.
Although the model is a dynamic one that relates organizational change to the
society’s lifeworld, it does not directly address the issue of power although the paper
does identify some tensions between different regulatory agencies during the processes
of setting the EFAR. The model takes the issue of power indirectly through Broadbent
et al. (1991) refinement that societal steering institutions have their own lifeworld and
steering media. On the one hand, this refinement makes it easier to explain the
interactions, conflict and tension between societal steering institutions. On the other
hand, it helps in explaining the relationships between steering institutions and
organizations whereby internal colonization takes place.
JAOC Finally, one of the major findings in the literature on accounting regulation in
4,3 Western countries is a lack of participation from the financial statements’ preparers
(Baskerville and Newby, 2002; Ryan et al., 1999). The current paper shows a similar
result with a lack of participation from the statements’ users and preparers. The
regulatory agencies, mainly, the accounting profession, CAA and the ECM, took the
lead in setting accounting regulations.
310 The process of developing accounting regulations in less developed countries, as
Samuels and Oliga (1982) argue, has become more ambiguous and theoretically
complex, yet the desire to develop domestic regulations in accordance with the
international ones, or as they argue to harmonize them, seems to continue. This process
is becoming increasingly complex especially as the pressures to change stem not only
from the interplay between domestic regulatory agencies, but also from the
relationships between domestic and international agencies that legitimate the need to
develop new regulations (Burchell et al., 1980).
This study explains how the relationship between domestic agencies such as the
ECM, the accounting profession and the state and international funding agencies such
as the WB, the IMF and the USAID produced “global” pressures to develop financial
regulations similar to the IASs. Although the empirical findings suggest that
“globalization” forces have influenced the process of developing the EFAR, a full
investigation of these influences is considered to be an area of further research where
international technical assistance and consultancy programmes create pressures to
change, or as Neu et al. (2002) put it “facilitating the globalization processes”. This
empirical insight highlights the importance of future research that explores the
relationship between institutional theory and Habermas’ reference schema.
A relationship in which a common scheme of knowledge, created through technical
assistance programme, facilitates the adoption of international practices like IASs.

Note
1. The accounting profession introduced another translated description of IASs in 1992.
The ECM description of IASs differs from that one issued by the accounting profession.

References
Abernethy, M. and Chua, W.F. (1996), “A field study of control system ‘redesign’: the impact of
institutional process on strategic choice”, Contemporary Accounting Research, Vol. 13
No. 2, pp. 569-606.
Al-Angri, H. and Sherer, M. (2001), “The implementation of quality review programme on audit
firms in Saudi Arabia: an illustration of change processes in a transitional economy”,
Working Paper, No. 01/05, University of Essex, UK.
Bailey, D. (1988), Accounting in Socialist Countries, Routledge, London.
Barton, A. (2005), “Professional accounting standards and the public sector – a mismatch”,
ABACUS, Vol. 41 No. 2, pp. 138-58.
Baskerville, R. and Newby, S.P. (2002), “Due process failure in sector-neutral accounting
standard-setting”, Financial, Accounting and Management, Vol. 18 No. 1, pp. 1-22.
Belkaoui, A. (2004), Accounting Theory, Thomson, London.
Bourmistrov, A. and Mellemivik, F. (1998), “Russian local governmental reform: autonomy for
accounting development”, The European Accounting Review, Vol. 8 No. 4, pp. 675-700.
Broadbent, J. (1992), “Change in organizations: a case study on the use of accounting in the NHS”, Financial
The British Accounting Review, Vol. 24, pp. 343-67.
Broadbent, J. and Guthrie, J. (1992), “Changes in the public sector: a review of recent ‘alternative’
accounting
accounting research”, Accounting, Auditing & Accountability Journal, Vol. 5 No. 2, pp. 3-31. regulations
Broadbent, J. and Laughlin, R. (2005a), “Organizational and accounting change: theoretical and
empirical reflections and thoughts on a future research agenda”, Journal of Accounting and
Organizational Change, Vol. 1 No. 1, pp. 7-26. 311
Broadbent, J. and Laughlin, R. (2005b), “Government concerns and tensions in accounting
standard-setting: the case of accounting for the Private Finance Initiative in the UK”,
Accounting and Business Research, Vol. 35 No. 3, pp. 207-28.
Broadbent, J., Jacobs, K. and Laughlin, R. (2001), “Organizational resistance strategies to
unwanted accounting and finance changes”, Accounting, Auditing & Accountability
Journal, Vol. 14 No. 5, pp. 565-86.
Broadbent, J., Laughlin, R. and Read, S. (1991), “Recent financial and administrative changes in
the NHS: a critical theory approach”, Critical Perspectives on Accounting, Vol. 2 No. 1,
pp. 1-29.
Bryer, A. (1999), “A Marxist critique of the FASB’s conceptual framework”, Critical Perspectives
on Accounting, Vol. 10, pp. 551-89.
Burchell, S., Clubb, C., Hopwood, A. and Hughes, J. (1980), “The role of accounting in
organizations and society”, Accounting, Organizations and Society, Vol. 5 No. 1, pp. 5-27.
Campbell, P. (1989), “Accounting standards for the public sector in Australia”, Financial,
Accountability and Management, Vol. 5 No. 1, pp. 39-51.
Carnegie, G. and Napier, C. (1996), “Critical and interpretive histories: insights into accounting’s
present and future through of its past”, Accounting, Auditing & Accountability Journal,
Vol. 9 No. 3, pp. 7-39.
Carpenter, V. and Feroz, E. (2001), “Institutional theory and accounting rule choice: an analysis of
four US state governments’ decisions to adopt GAAP”, Accounting, Organizations and
Society, Vol. 26, pp. 565-96.
Chamisa, E.E. (2000), “The relevance and observance of the IASC standards in developing
countries and the particular case of Zimbabwe”, The International Journal of Accounting,
Vol. 35 No. 2, pp. 267-86.
Chanchani, S. and Willett, R. (2004), “An empirical assessment of Gray’s accounting value
constructs”, The International Journal of Accounting, Vol. 39 No. 2, pp. 125-54.
Chand, P. (2005), “Impetus to the success of harmonization: the case of South Pacific Island
nations”, Critical Perspectives on Accounting, Vol. 16 No. 3, pp. 209-26.
Chow, D.S.L., Humphrey, C. and Moll, J. (2007), “Developing whole government accounting in the
UK: grand claims, practical complexities and suggested future research agenda”,
Financial, Accounting and Management, Vol. 23 No. 1, pp. 27-54.
Chua, W.F. and Sinclair, A. (1994), “Interests and the profession-state dynamic: explaining the
emergence of the Australian public sector accounting standards board”, Journal of
Business Finance and Accounting, Vol. 21 No. 5, pp. 669-705.
Cooper, K. and Keim, G. (1983), “The economic rational for the nature and extent of corporate
financial disclosure regulation: a critical assessment”, Journal of Accounting and Public
Policy, Vol. 2 No. 3, pp. 189-205.
Covaleski, M., Dirsmith, M.W. and Michelman, J. (1993), “An institutional theory perspective on
the DRG framework: case-mix accounting systems and health care organizations”,
Accounting, Organizations and Society, Vol. 18 No. 1, pp. 65-80.
JAOC Dillard, J. and Smith, H. (1999), “The effect of prospective payment system on rural health care”,
Accounting Forum, Vol. 23 No. 4, pp. 258-327.
4,3
DiMaggio, P.J. and Powell, W.W. (1983), “The iron cage revisited: institutional isomorphism and
collective rationality in organizational field”, American Sociological Review, Vol. 48,
pp. 147-60.
Etherington, L.D. and Richardson, A.J. (1994), “Institutional pressures on university accounting
312 education in Canada”, Contemporary Accounting Research (Special Education Research
Issue), pp. 141-62.
Gray, S.L. (1988), “Towards a theory of culture influence on the development of accounting
systems internationally”, ABACUS, Vol. 24 No. 1, pp. 1-15.
Habermas, J. (1996), Between Facts and Norms, MIT Press, Cambridge, MA, London.
Habermas, J. (1987), The Theory of Communication Action, Vol. 2, London (translated by
McCarthy, T., Heinemann).
Habermas, J. (1975), Legitimation Crisis, London (translated by McCarthy, T., Heinemann).
Hopper, T. and Armstrong, P. (1991), “Cost accounting, controlling labour and the rise of
conglomerates”, Accounting and Organizations and Society, Vol. 16 Nos 5/6, pp. 405-38.
Hopwood, A. (1987), “The archaeology of accounting systems”, Accounting, Organizations and
Society, Vol. 12 No. 3, pp. 207-34.
Hopwood, A. (1990), “Accounting and organizational change”, Accounting, Auditing and
Accountability Journal, Vol. 3 No. 1, pp. 7-17.
Hoque, Z. and Alam, M. (1999), “TQM adoption institutionalism and changes in management
accounting systems: a case study”, Accounting and Business Research, Vol. 29 No. 3,
pp. 199-210.
Jaruga, A. (1996), “Accounting in socialist countries: the beginnings of reform”, in Garrog, N. and
Mcleay, S. (Eds), Accounting in Transition: The Implication of Political Economic Reform
in Central Europe, Routledge, London.
Kwok, W.C. and Sharp, D. (2005), “Power and international accounting standard setting:
evidence from segment reporting and intangible assets projects”, Accounting, Auditing
and Accountability Journal, Vol. 18 No. 1, pp. 74-99.
Lapsley, I. (1994), “Responsibility accounting revived? Market reforms and budgetary control in
health care”, Management Accounting Research, Vol. 5 No. 2, pp. 337-52.
Laughlin, R. (1987), “Accounting systems in organizational contexts: a case for critical theory”,
Accounting, Organization and Society, Vol. 12 No. 5, pp. 479-502.
Laughlin, R. (1991), “Environmental disturbances and organizational transitions and
transformations: some alternative models”, Organization Studies, Vol. 12 No. 2, pp. 209-32.
Laughlin, R. (1995), “Empirical research in accounting: alternative approaches and a case for
“middle range thinking”, Accounting, Auditing & Accountability Journal, Vol. 8 No. 1,
pp. 63-87.
Laughlin, R. (2007), “Critical reflections on research approaches, accounting regulations and the
regulation of accounting”, The British Accounting Review, Vol. 39 No. 4, pp. 271-89.
Laughlin, R. and Broadbent, J. (1993), “Accounting and laws: partners in the juridification of the
public sector in the UK”, Critical Perspectives on Accounting, Vol. 4 No. 4, pp. 337-68.
Lawrence, S. (1999), “From welfare state to the civil society: the constitutive use of accounting in
the reform of NZ public sector”, Critical Perspectives on Accounting, Vol. 10, pp. 223-43.
Lodh, S.C. and Garffikin, M.J.R. (1997), “Critical studies in accounting research, rationality and Financial
Habermas: a methodological reflection”, Critical Perspectives on Accounting, Vol. 8,
pp. 433-74. accounting
Meyer, J. and Rowan, B. (1977), “Institutionalised organizations: formal structure as myth and regulations
ceremony”, American Journal of Sociology, Vol. 83, pp. 340-63.
Miller, P. and O’Leary, T. (1987), “Accounting and the construction of governable person”,
Accounting, Organizations and Society, Vol. 12 No. 3, pp. 235-65. 313
Mouristen, J. (1994), “Rationality, institutions and decision-making: reflection on March and
Olsen’s rediscovering institutions”, Accounting, Organization and Society, Vol. 19 No. 2,
pp. 193-211.
Neu, D., Gomez, E., Léon, O. and Zepeda, M. (2002), “Facilitating’ globalisation processes:
financial technologies and the world bank”, Accounting Forum, Vol. 26 Nos 3/4, pp. 272-90.
Perera, M.B. (1989), “Accounting in developing countries: a case for localized uniformity”,
The British Accounting Review, Vol. 2 No. 2, pp. 141-58.
Power, M. and Laughlin, R. (1992), “Critical theory and accounting”, in Alvessson, M. and
Willimott, H. (Eds), Critical Management Studies, Sage, London.
Power, M. and Laughlin, R. (1996), “Habermas, law and accounting”, Accounting, Organizations
and Society, Vol. 21 No. 5, pp. 441-65.
Richardson, S., Cullen, J. and Richardson, B. (1996), “The story of a schizoid organization: how
accounting and the accountant are implicated in its creation”, Accounting, Auditing and
Accountability Journal, Vol. 9 No. 1, pp. 8-30.
Roberts, R. and Kurtenbach, J. (1998), “State regulation and professional accounting educational
reforms: an empirical test of regulatory capture theory”, Journal of Accounting and Public
Policy, Vol. 17, pp. 209-26.
Ryan, C., Dunstan, K. and Stanley, T. (1999), “Constituent participation in the Australian public
sector accounting standard-setting process: the case of ED55”, Financial, Accounting and
Management, Vol. 15 No. 2, pp. 173-200.
Ryan, C., Dunstan, K. and Stanley, T. (2000), “Local government accounting standards setting in
Australia: did constituents participate? Financial”, Accounting and Management, Vol. 16
No. 4, pp. 373-96.
Scapens, R.W. (1990), “Researching management accounting practice: the role of case study
methods”, The British Accounting Review, Vol. 22, pp. 259-81.
Scapens, R.W. (1994), “Never mind the gap: towards an institutional perspective on management
accounting practices”, Management Accounting Research, Vol. 5, pp. 301-21.
Scott, W.R. (1987), “The adolescence of institutional theory”, Administrative Science Quarterly,
Vol. 22, pp. 493-511.
Scott, W.R. (1995), Institutions and Organizations: Foundations For Organizational Science,
Sage, London.
Solomon, D. (1983), “The political implications of accounting standard setting”, Accounting and
Business Research, Spring, pp. 107-18.
Taylor, P. and Turley, S. (1986), The Regulation of Accounting, Basil Blackwell, New York, NY.
Touron, P. (2005), “The adoption of US GAAP by French firms before the creation of the
international accounting standards committee: an institutional explanation”, Critical
Perspectives on Accounting, Vol. 16 No. 6, pp. 851-73.
Watts, L.R. and Zimmerman, J.L. (1978), “Towards a positive theory of the determination of
accounting standards”, The Accounting Review, pp. 112-34.
JAOC Watts, L.R. and Zimmerman, J.L. (1986), Positive Accounting Theory, Prentice-Hall,
New York, NY.
4,3
Xiao, J., Weetman, P. and Sun, M. (2004), “Political influence and co-existence of a uniform
accounting system and accounting standards: recent developments in China”, ABACUS,
Vol. 40 No. 2, pp. 193-218.

314
Egyptian reference, conference papers, newspaper, reports and legislations
Academic articles
Abd-Elhay, A.M. (1969), “A critical study of assets valuation and income determination under
the new uniform UAR (Egypt) accounting system relative to the objective of economic
planning”, unpublished PhD thesis, Michigan State University, USA.
Abd El-Salam, O. (1998), “Egypt”, in Roberts, C., Weetman, P. and Gordon, P. (Eds), International
Financial Accounting: A Comparative Approach, Financial Times, Pitman Publishing,
London, pp. 619-30.
Abd El-Salam, O. and Weetman, P. (2003), “Introducing international accounting standards to an
emerging capital market: relative familiarity and language effect, with a case study of
Egypt”, Journal of International Auditing, Accounting and Taxation, Vol. 12 No. 1,
pp. 63-84.
Abdel-Khalik, A. (1966), “Controllership in Egypt”, Journal of Accounting Research, Vol. 3,
pp. 37-46.
Ali El-Dean, Bahaa (2002), Privatization and the Creation of a Market-based Legal System:
The Case of Egypt, Koninklijke Brill NV, Leiden, The Netherlands.
Amer, M.B. (1969), “Impact of public ownership on UAR accounting profession”, International
Journal of Accounting Education and Research, Spring, pp. 49-61.
Amer, M.B. and Khairy, M.M. (1979), “Accounting education in Egypt”, in Enthoven, A. (Ed.),
Accounting Education in Third World Development and Management, North Holland,
Amsterdam, pp. 309-25.
Ayubi, N. (1989), “Bureaucracy and development in Egypt today”, Journal of Asian and African
Studies, Vol. XXIV Nos 1-2, pp. 62-78.
Briston, R. and El-Aashker, A. (1984), “The Egyptian accounting system: a case study of Western
influence”, International Journal of Accounting Education and Research, Vol. 19 No. 2,
pp. 129-56.
Dahawy, K., Merino, B. and Conover, L. (2002), “The conflict between IAS disclosure and the
secretive culture in Egypt”, Advances in International Accounting, Vol. 15, pp. 203-28.
Darwish, M.N. (1997), “A framework for measuring the effect of governmental intervention on
the supply of accounting information in Egypt (with Reference to the American
Experience)”, unpublished PhD dissertation, Alexandria University, Egypt.
Ellithy, A.A. and Nixson, F. (1998), “Small firm formation in transitional economics: a case study
of Egypt”, in Cook, P., Kirkpatick, C. and Nixson, F. (Eds), Privatisation, Enterprise
Development and Economic Reform, Cheltenham, Edward Elgar, London, pp. 312-28.
HassabElnaby, H.R. and Mosebach, M. (2005), “Culture consequences in controlling agency costs:
Egyptian evidence”, Journal of Accounting Auditing and Taxation, Vol. 14, pp. 19-32.
HassabElnaby, H.R., Epps, R.W. and Said, A.A. (2003), “The impact of environmental factors on
accounting development: an Egyptian longitudinal study”, Critical Perspectives on
Accounting, Vol. 14, pp. 273-92.
Hassan, M.K. (2008), “The development of financial regulations in Egypt: legitimating the Financial
international accounting standards”, Managerial Auditing Journal, Vol. 23 No. 5
( forthcoming). accounting
Hergreaves, E. (2001), “Profiles of educational assessment systems world-wide: assessment in regulations
Egypt”, Assessment in Education, Vol. 8 No. 2, pp. 247-60.
Hopwood, D. (1982), Egypt: Politics & Society 1945-1981, Routledge, London.
Krause, E. (2001), “Professional group power in developing societies”, Current Sociology, Vol. 49 315
No. 4, pp. 149-75.
McDermott, A. (1988), Egypt from Nasser to Mubarak: A Flawed Revolution, Croom Helm,
London.
Messallam, A. (1998), “The organizational ecology of investment firms in Egypt: organizational
founding”, Organization Studies, Vol. 19 No. 1, pp. 23-46.
Ottaway, M. (2003), Democracy Challenged: The Rise of Semi-Authoritarianism, Carnegie
Endowment for International Peace, USA.
Richards, A. (1991), “The political economy of dilatory reform: Egypt in 1980s”, World
Development, Vol. 19 No. 12, pp. 1721-30.
Salem, A.K. (2001), “The role of financial disclosure in serving the needs of investors’
decision-making processes under the economic liberalisation policy in Egypt”,
unpublished PhD dissertation, Alexandria University, Egypt (in Arabic).
Samuels, J. and Oliga, J. (1982), “Accounting standards in developing countries”,
The International Journal of Accounting Education and Research, Vol. 18 No. 1, pp. 69-88.
Shahin, A.I. and Wright, P.L. (2004), “Leadership in the context of culture: an Egyptian
perspective”, The Leadership and Organization Development Journal, Vol. 25 No. 26,
pp. 499-511.
Younis, T. (1996), “Privatisation: a review of policy and implementation in selected Arab
countries”, International Journal of Public Sector Management, Vol. 9 No. 3, pp. 18-25.
Youssef, S. (1996), “Structural reform programme of Egyptian state-owned enterprises: current
impact and future prospects”, Journal of Management Development, Vol. 15 No. 5, pp. 88-99.
Youssef, S.M. (2003), “Role of the state as a salient stakeholder in a transition economy: the case
of Egypt”, Journal of Academy of Business Economics, Vol. 3 No. 1, pp. 1-13.
Zaki, M. (2001), “IMF-supported stabilization programs and their critics: evidence from the recent
experience of Egypt”, World Development, Vol. 29 No. 11, pp. 1867-83.
Zetter, R. and Hamza, M. (1997), “The impact of foreign technical assistance on urban
development: projects in Egypt”, Habitat International, Vol. 21 No. 2, pp. 153-66.
Zohny, A. (2000), “The suitability of US security law and regulations to serve as model for
Egyptian financial markets”, Arab Law Quarterly, pp. 5-47.

Conference papers
Abdel Halim, A. (2004), “Supporting public participation in Egypt”, paper presented in the
Forum for Activating Egyptian Reform Programs sponsored by Center for International
Private Enterprise (CIPE) and Al Ahram Regional Press Institute in September.
Hindy, M. (1995), “The Egyptian experience of privatisation”, paper presented at the
23rd International Congress of Administrative Science, Dubai-Riyadh.
Wahdan, M.A., Spronck, P., Ali, H.F., Vaassen, E. and Herik, H.J. van den (2005), “Auditing in
Egypt: a study of challenges, problems, and possibility of an automatic formulation of the
auditor’s report”, Proceeding of the Congress 14th IMDA, pp. 91-8.
JAOC Zerban, A. (2002), “Power/knowledge relations and accounting change in Egypt (a Foucaldian
perspective)”, paper presented at the Accounting, Business & Financial History
4,3 Conference (ABFH), Cardiff Business School, pp. 17-18.
Press articles and reports
Abdel-Razek, S. (1999), “Prize pupil still has problems”, Al-Ahram Weekly On-line, No. 424,
April 8-14.
316 Country Profile (2006), Egypt, The Economist Intelligence Unit Limited.
Gamal, W. (2002), “Book fixing, here and there”, Al-Ahram Weekly On-line, No. 600, August 22-28.
Hegazy, A. (2004), “The accounting profession in Egypt: towards a robust financial control”,
unpublished report (in Arabic).
Momani, B. (2003), “Promoting economic liberalization in Egypt: from US foreign aid to trade and
investment”, Middle East Review of International Affairs, Vol. 7 No. 3, pp. 88-101.
Rahman, M.Z., Msadek, S. and Waly, H. (2002), “Report on the observance of standards (ROSC)
– Arab Republic of Egypt”, World Bank Reports, Egypt.
Renshall, M. (1981), “New stirrings in accounting profession”, World Accounting Report,
pp. 18-21.
Sami, A. (2000), “Called to account”, Al-Ahram Weekly On-line, No. 509, November 23-29.
Sami, A. (2001), “Pumping development”, Al-Ahram Weekly On-line, No. 534, May 17-23.

Legislations
(The) Central Accounting Administration Charter of 1966.
Law No 32/1977 (1977), The law of Foreign Investment and Free Zones.
Law No 159/1981 (1981), The Law of Joint Stock Companies, Partnership Limited by Shares and
Limited Liability Companies.
Law No 203/1991 (1991), The Public Business Sector Companies Law and Its Executive
Regulations. The Privatization Act No. 203 of 1991.
Law No 95/1992 (1992), The Capital Market with Its Executive Regulations.
Ministerial Decree of 1996 (Enacted by the head of central accounting administration) (1996),
International Accounting Standard as a Conceptual Framework supplementing the Unified
Accounting System, Vol. 215, published in El-Wakae El-Masria.
(The) Ministerial Decree No. 503/ 1997 (1997), Rules Governing the Capital Market Operations.
Presidential Degree No 520/79 Establishing the General Authority of Capital Market.

Further reading
Accounting Practices in Egypt (1997), “Accounting practices in Egypt: setting standards where it
counts”, Business Monthly.
Covaleski, A., Dirsmith, M.W. and Samuel, S. (1996), “Management accounting research:
contributions of organizational and sociological theories”, Journal of Management
Accounting Research., Vol. 8, pp. 1-35.
El-Labban, A. (1998), “Banking on stability”, Al-Ahram Weekly On-line, 26 November-2 December,
No. 405.
Fogarty, T. (1992), “Financial accounting standard setting as an institutionalised action field:
constraints, opportunities and dilemmas”, Journal of Accounting and Public Policy, Vol. 11,
pp. 331-55.
Nasr, S. (1998), “Bracing for the new openness”, Al-Ahram Weekly On-line, No. 385, July 9-15.
Appendix Financial
The main research questions were as follows:
(1) What are the reasons behind the emergence of the Egyptian accounting regulations?
accounting
(2) How have Egyptian accounting regulations have been developed and changed?
regulations
(3) What are the reasons that lie behind the development of regulations that coincide with
the IASs?
(4) Were IASs imposed or voluntarily chosen? 317
(5) What is your opinion about unified accounting systems?
(6) Do you think that Egypt was in need for new financial accounting regulations?
(7) Who contributed to the development of new regulations? And how?
(8) Do you think that IASs are suitable regulations for the Egyptian environment?

Corresponding author
Mostafa Kamal Hassan can be contacted at: mhassan@sharjah.ac.ae

To purchase reprints of this article please e-mail: reprints@emeraldinsight.com

Or visit our web site for further details: www.emeraldinsight.com/reprints