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Lobbying behaviour and the development of international accounting standards

Author

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  • Sara York Kenny
  • Robert Larson

Abstract

This paper studies the role of lobbying in an international (i.e., harmonization) accounting standards setting and examines the IASC's process of promulgating International Accounting Standard (IAS) 31, 'Financial Reporting of Interests in Joint Ventures'. Our study begins with an examination of the Exposure Draft (ED 35, 'Financial Reporting of Interests in Joint Ventures') preceding IAS 31 and analyses the lobbying efforts observed during the promulgation process. Consistent with prior literature, the paper analyses lobbyists and their lobbying positions. During the time frame of the study (1989 and 1990), the IASC changed its due process, which affords us the opportunity also to analyse the IASC's strategic approach to public input. Accordingly, this study incorporates aspects of institutional theory as it relates to strategic choice by organizations. The comment letters received by the IASC regarding ED 35 were analysed using a form of content analysis. The analyses generally support the hypothesized relationships; namely, lobbying firms tend to be very large, and they lobby against any change in the status quo; professional and trade organizations lobby on behalf of their constituents and tend to support the majority positions held by those constituents; and the regulatory body (IASC) seeks acceptance from its constituency by adapting its position to that which is more palatable to the lobbyists. The interaction between respondents and the IASC is consistent with an institutional theory explanation of organizational change and adaptation to environment pressures. Few individual firms lobbied the IASC Rather, the bulk of the respondents to ED 35 were professional associations and organizations. The result contrasts markedly with both our expectations and prior research involving lobbying of the FASB. The dearth of corporate respondents to ED 35 implies that multinational corporations do not yet see the IASC as a serious regulatory organization. Further, few legal, governmental or regulatory organizations required compliance with IASs during 1989 and 1990, when IAS 31 was being deliberated,

Suggested Citation

  • Sara York Kenny & Robert Larson, 1993. "Lobbying behaviour and the development of international accounting standards," European Accounting Review, Taylor & Francis Journals, vol. 2(3), pages 531-554.
    • Handle: RePEc:taf:euract:v:2:y:1993:i:3:p:531-554
    DOI: 10.1080/09638189300000050
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    Cited by:

    1. Philippe Touron, 2000. "APPORTS ET LIMITES DE LA THEORIE INSTITUTIONNELLE DES ORGANISATIONS Etude de trois cas d'adoption de normes comptables internationales en France," Post-Print halshs-00587516, HAL.
    2. Philippe Touron, 2002. "Theorie Institutionnelle Et Adoption De Normes Comptables Internationalement Reconnues : Etude De Trois Cas Français Sur La Periode 1989 - 1993," Post-Print halshs-00584540, HAL.
    3. Hervé Kohler & Christine Pochet & Anne Le Manh, 2021. "Auditors as intermediaries in the endogenization of an accounting standard: The case of IFRS 15 within the telecom industry," Post-Print hal-03337420, HAL.
    4. Hervé Kohler & Anne Le Manh, 2014. "Etude Exploratoire De La Participation Au « Due Processus » De L'Iasb De L'Industrie Des Telecommunications, Dans Le Cadre Du Projet « Revenue Recognition »," Post-Print hal-01899618, HAL.
    5. Adela Deaconu & Dan Dacian Cuzdriorean, 2016. "Accounting and the state in post-communist Romania," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 5(1), pages 59-93.
    6. George Georgiou, 2002. "Corporate non-participation in the ASB standard-setting process," European Accounting Review, Taylor & Francis Journals, vol. 11(4), pages 699-722.
    7. Okamoto, Noriaki, 2017. "Norm entrepreneur lobbying and persuasion: A case study involving the IASB's modification of an exposure draft," Research in Accounting Regulation, Elsevier, vol. 29(2), pages 129-138.
    8. Adela Deaconu & Anuţa Buiga & Cristina Nistor, 2010. "The Value Relevance of Fair Value," Transition Studies Review, Springer;Central Eastern European University Network (CEEUN), vol. 17(1), pages 151-169, May.
    9. Urska Kosi & Antonia Reither, 2014. "Determinants of Corporate Participation in the IFRS 4 (Insurance Contracts) Replacement Process," Accounting in Europe, Taylor & Francis Journals, vol. 11(1), pages 89-112, June.
    10. Kohler, Hervé & Pochet, Christine & Le Manh, Anne, 2021. "Auditors as intermediaries in the endogenization of an accounting standard: The case of IFRS 15 within the telecom industry," Accounting, Organizations and Society, Elsevier, vol. 91(C).
    11. Philip D. Palmer, 2013. "Exploring attitudes to financial reporting in the Australian not-for-profit sector," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 53(1), pages 217-241, March.
    12. Rey, Andrea & Maglio, Roberto & Rapone, Valerio, 2020. "Lobbying during IASB and FASB convergence due processes: Evidence from the IFRS 16 project on leases," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 41(C).
    13. Dunk, Alan S. & Kilgore, Alan, 2000. "The Reintroduction of the True and Fair Override and Harmonization with IASC Standards in Australia: Lessons from the EU and Implications for Financial Reporting and International Trade," The International Journal of Accounting, Elsevier, vol. 35(2), pages 213-226, July.
    14. Luther, Robert, 1996. "The development of accounting regulation in the extractive industries: An international review," The International Journal of Accounting, Elsevier, vol. 31(1), pages 67-93.
    15. Renata Stenka & Peter Taylor, 2010. "Setting UK standards on the concept of control: An analysis of lobbying behaviour," Accounting and Business Research, Taylor & Francis Journals, vol. 40(2), pages 109-130.
    16. Georgiou, George, 2010. "The IASB standard-setting process: Participation and perceptions of financial statement users," The British Accounting Review, Elsevier, vol. 42(2), pages 103-118.
    17. Raf Orens & Ann Jorissen & Nadine Lybaert & Leo Van Der Tas, 2011. "Corporate Lobbying in Private Accounting Standard Setting: Does the IASB have to Reckon with National Differences?," Accounting in Europe, Taylor & Francis Journals, vol. 8(2), pages 211-234.
    18. David Procházka, 2015. "Lobbying on the IASB Standards: An analysis of the Lobbyists’ Behaviour over Period 2006–2014," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 4(2), pages 129-143.
    19. Huian Maria Carmen, 2013. "Analysis Of The Constituents’ Participation In The Development Of The 1st Phase Of Ifrs 9 Financial Instruments," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 209-216, February.
    20. Gavana, Giovanna & Gottardo, Pietro & Moisello, Anna Maria, 2020. "Did the switch to IFRS 11 for joint ventures affect the value relevance of corporate consolidated financial statements? Evidence from France and Italy," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 38(C).

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