The internationalization of accounting policy in a soft-law context: the case of Renault, 1980-1984

Drawing on institutional theory, this study analyses the internationalization of Renault's consolidated financial statements from 1981 to 1984. This involved the voluntary adoption of International Accounting Standards (IAS), subsequent changes of accounting policy and certification by an international auditor. The paper questions why a state-owned French company began to prepare its consolidated accounts in accordance with IAS and why it selected auditors from the .Big Eight. firms. It is shown that the adoption of IAS was directly linked to internationalization and that accounting policy was loosely coupled to standards in a way that left room for earnings management.