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Issue Networks, Value Structures and the Formulation of Accounting Standards: An Exercise in Theory Building

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  • Gary Kleinman

    (Touro Graduate School of Business)

  • David Hossain

    (California State University Los Angeles)

Abstract

This study is an exercise in theory building. It begins from the premise that current theory with respect to the setting of accounting standards is inadequate. We advance current theory by incorporating new ideas from sociology (issues network theory, see Heclo (1978, In: King A (ed) The New American Political System. American Enterprise Institute, Washington, DC, pp 87–124) and social psychology (values structure ideas drawn from Shakun (1988, Evolutionary system design: policy making under complexity and group decision support systems. Holden-Day, Inc., Oakland, CA). In doing so, we extend previous theorizing on the accounting standard setting process (e.g., triocracy theory). Issue network theory holds that groups with intellectual, ideological and economic interests have interests in, and may exert efforts to influence, policy adoption. It is a natural outgrowth of, and important extension to, triocracy theory. We draw on Shakun’s (1988, Evolutionary system design: policy making under complexity and group decision support systems. Holden-Day, Inc., Oakland, CA) Evolutionary Systems Design theory to elucidate a theory of motivation. We argue that complex motivational structures influence the behaviors of the parties to the accounting standard setting process. As part of this effort, we categorize the guiding terminal values, instrumental values and operational goals that guide participant behaviors. We draw on previous literature to document parts of the model.

Suggested Citation

  • Gary Kleinman & David Hossain, 2009. "Issue Networks, Value Structures and the Formulation of Accounting Standards: An Exercise in Theory Building," Group Decision and Negotiation, Springer, vol. 18(1), pages 5-26, January.
    • Handle: RePEc:spr:grdene:v:18:y:2009:i:1:d:10.1007_s10726-008-9122-1
    DOI: 10.1007/s10726-008-9122-1
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    References listed on IDEAS

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    1. Haring, John R, Jr, 1979. "Accounting Rules and "The Accounting Establishment"," The Journal of Business, University of Chicago Press, vol. 52(4), pages 507-519, October.
    2. Julie Nyland, 1995. "Issue Networks and Nonprofit Organizations," Review of Policy Research, Policy Studies Organization, vol. 14(1‐2), pages 195-204, March.
    3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    4. Newman, Dp, 1981. "An Investigation Of The Distribution Of Power In The Apb And Fasb," Journal of Accounting Research, Wiley Blackwell, vol. 19(1), pages 247-262.
    5. Elmuttassim Hussein, Mohamed & Edward Ketz, J., 1991. "Accounting standards-setting in the U.S.: An analysis of power and social exchange," Journal of Accounting and Public Policy, Elsevier, vol. 10(1), pages 59-81.
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    Cited by:

    1. Kleinman Gary & Anandarajan Asokan & Palmon Dan, 2012. "Who's to Judge? Understanding Issues of Auditor Independence Versus Judicial Independence," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 2(1), pages 1-52, August.
    2. Gary Kleinman & Pamela Strickland & Asokan Anandarajan, 2016. "The Accounting Court: Some Speculations on Why Not?," Group Decision and Negotiation, Springer, vol. 25(4), pages 845-871, July.

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