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Ideological diversity in standard setting

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  • Jivas Chakravarthy

    (Chapman University)

Abstract

I compare voting positions taken by Financial Accounting Standards Board (FASB) members on standards to positions taken by constituent sponsors in comment letters both before and after the emergence of the FASB’s conceptual framework. I find that, relative to the Pre-CF regime (1973–1986), FASB members in the CF regime (1987–2007) take positions that are (i) less like their constituent sponsors and (ii) more like one another. Both shifts are associated with standards increasing accounting relevance; in the CF regime, such standards are likely a product of the framework’s broad focus on decision usefulness. From 1996 to 2007, all but one dissenting vote on fair value standards explicitly argues for an even greater use of fair values, while none argue for less use. To the extent standard-setters’ idiosyncratic ideologies influence their voting positions, the evidence is consistent with a decline in the level of ideological diversity among FASB members.

Suggested Citation

  • Jivas Chakravarthy, 2019. "Ideological diversity in standard setting," Review of Accounting Studies, Springer, vol. 24(1), pages 113-155, March.
    • Handle: RePEc:spr:reaccs:v:24:y:2019:i:1:d:10.1007_s11142-018-9478-7
    DOI: 10.1007/s11142-018-9478-7
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    More about this item

    Keywords

    Accounting standards; Conceptual framework; Financial Accounting Standards Board (FASB); Ideology; Standard setting;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

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