Abstract
The present paper aims to empirically explore the impact of SMEs on foreign direct investment inflows and analyses the effect role of IFRS adoption on the relationship between the SMEs sector and foreign direct investment inflows in short and long run in Algeria during the period of 1970-2017. This investigation intends to fill a major gap regarding empirical literature on FDI drivers in developing countries. Using the ARDL bounds testing approach, the findings show a positive association between SMEs and foreign direct investment inflows in Algeria in the long-run. However, in terms of the role of IFRS adoption in mediating the impact of SMEs on FDI inflows in Algeria, our findings report a negative contribution of IFRS adoption of the association between SMEs and FDI inflows in both long and short run. These findings provide significant implications for regulators and policymakers in developing countries improve the business environment of their countries, manager and foreign investors in assessing the business environment in host countries and for both developing countries and academic research. (C) 2019 The Authors. Published by IASE.