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Political pressures and the evolution of disclosure regulation

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  • Jeremy Bertomeu

    (City University of New York)

  • Robert P. Magee

    (Northwestern University)

Abstract

This paper examines the process that drives the formation and evolution of disclosure regulations. In equilibrium, changes in the regulation depend on the status quo, standard-setters’ political accountability and underlying objectives, and the cost and benefits of disclosure to reporting entities. Excessive political accountability need not implement the regulation preferred by diversified investors. Political pressures slow standard-setting and, if the standard-setter prefers high levels of disclosure, induce regulatory cycles characterized by long phases of increasing disclosure requirements followed by a sudden deregulation.

Suggested Citation

  • Jeremy Bertomeu & Robert P. Magee, 2015. "Political pressures and the evolution of disclosure regulation," Review of Accounting Studies, Springer, vol. 20(2), pages 775-802, June.
    • Handle: RePEc:spr:reaccs:v:20:y:2015:i:2:d:10.1007_s11142-014-9312-9
    DOI: 10.1007/s11142-014-9312-9
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    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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