Towards an understanding of the role of standard setters in standard setting
AbstractWe investigate the effect of standard setters in standard setting: We examine how certain professional and political characteristics of FASB members and SEC commissioners predict the accounting "reliability" and "relevance" of proposed standards. Notably, we find FASB members with backgrounds in financial services are more likely to propose standards that decrease "reliability" and increase "relevance," partly due to their tendency to propose fair-value methods. We find opposite results for FASB members affiliated with the Democratic Party, although only when excluding financial-services background as an independent variable. Jackknife procedures show that results are robust to omitting any individual standard setter.
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Bibliographic InfoPaper provided by Harvard Business School in its series Harvard Business School Working Papers with number 10-105.
Length: 54 pages
Date of creation: May 2010
Date of revision: May 2012
accounting; FASB; politics; relevance; reliability; standard setting;
Find related papers by JEL classification:
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- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
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- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
This paper has been announced in the following NEP Reports:
- NEP-ACC-2010-06-11 (Accounting & Auditing)
- NEP-ALL-2010-06-11 (All new papers)
- NEP-POL-2010-06-11 (Positive Political Economics)
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