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On The Legitimacy Of Accounting Standard Setting By Privately Organised Institutions In Germany And Europe


  • Matthias Schmidt


Recent developments in German and European accounting regulation show a growing relevance of accounting rules set by privately organised institutions. This article refers to those developments. It analyses the institutional legitimacy of accounting standard setting by private authorities, using an economic approach based on the concept of hypothetical consent. Legitimacy concerns occur particularly for the German standard setter, since we cannot preclude various conflicting interests. The article provides suggestions for the German legislature to mitigate the problem and to facilitate the instalment of structural safeguards that can assure a legitimate standard setting process. The paper also discusses in what way it is possible to utilize the merits of regulatory competition as an additional safeguard to maintain legitimacy of private standard setting bodies. Regulatory competition among different standard setters in Europe is particularly considered to be an alternative to a harmonisation of accounting rules on the basis of one single set of standards as intended in a recent EU Commission’s proposal.

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  • Matthias Schmidt, 2002. "On The Legitimacy Of Accounting Standard Setting By Privately Organised Institutions In Germany And Europe," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 54(2), pages 171-193, April.
  • Handle: RePEc:sbr:abstra:v:54:y:2002:i:2:p:171-193

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    References listed on IDEAS

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    Cited by:

    1. Fülbier, Rolf Uwe & Klein, Malte, 2013. "Financial accounting and reporting in Germany: A case study on German accounting tradition and experiences with the IFRS adoption," Bayreuth Working Papers on Finance, Accounting and Taxation (FAcT-Papers) 2013-01, University of Bayreuth, Chair of Finance and Banking.
    2. Roland Königsgruber & Stefan Palan, 2015. "Earnings management and participation in accounting standard-setting," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(1), pages 31-52, March.
    3. Schmidt, Matthias, 2005. ""Whistle Blowing" Regulation and Accounting Standards Enforcement in Germany and Europe--An Economic Perspective," International Review of Law and Economics, Elsevier, vol. 25(2), pages 143-168, June.

    More about this item

    JEL classification:

    • K29 - Law and Economics - - Regulation and Business Law - - - Other
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General


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