IDEAS home Printed from https://ideas.repec.org/a/spr/reaccs/v24y2019i1d10.1007_s11142-018-9478-7.html
   My bibliography  Save this article

Ideological diversity in standard setting

Author

Listed:
  • Jivas Chakravarthy

    (Chapman University)

Abstract

I compare voting positions taken by Financial Accounting Standards Board (FASB) members on standards to positions taken by constituent sponsors in comment letters both before and after the emergence of the FASB’s conceptual framework. I find that, relative to the Pre-CF regime (1973–1986), FASB members in the CF regime (1987–2007) take positions that are (i) less like their constituent sponsors and (ii) more like one another. Both shifts are associated with standards increasing accounting relevance; in the CF regime, such standards are likely a product of the framework’s broad focus on decision usefulness. From 1996 to 2007, all but one dissenting vote on fair value standards explicitly argues for an even greater use of fair values, while none argue for less use. To the extent standard-setters’ idiosyncratic ideologies influence their voting positions, the evidence is consistent with a decline in the level of ideological diversity among FASB members.

Suggested Citation

  • Jivas Chakravarthy, 2019. "Ideological diversity in standard setting," Review of Accounting Studies, Springer, vol. 24(1), pages 113-155, March.
    • Handle: RePEc:spr:reaccs:v:24:y:2019:i:1:d:10.1007_s11142-018-9478-7
    DOI: 10.1007/s11142-018-9478-7
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11142-018-9478-7
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11142-018-9478-7?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Allen, Abigail & Ramanna, Karthik, 2013. "Towards an understanding of the role of standard setters in standard setting," Journal of Accounting and Economics, Elsevier, vol. 55(1), pages 66-90.
    2. Selto, Fh & Grove, Hd, 1983. "The Predictive Power Of Voting Power Indexes - Fasb Voting On Statements Of Financial Accounting Standards Nos. 45-69," Journal of Accounting Research, Wiley Blackwell, vol. 21(2), pages 619-622.
    3. Tripathi Micky & Ansolabehere Stephen & Jr James M. Snyder, 2002. "Are PAC Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act," Business and Politics, De Gruyter, vol. 4(2), pages 1-26, August.
    4. Puro, M, 1984. "Audit Firm Lobbying Before The Financial Accounting Standards Board - An Empirical-Study," Journal of Accounting Research, Wiley Blackwell, vol. 22(2), pages 624-646.
    5. Martin, Andrew D. & Quinn, Kevin M., 2002. "Dynamic Ideal Point Estimation via Markov Chain Monte Carlo for the U.S. Supreme Court, 1953–1999," Political Analysis, Cambridge University Press, vol. 10(2), pages 134-153, April.
    6. Kothari, S.P. & Ramanna, Karthik & Skinner, Douglas J., 2010. "Implications for GAAP from an analysis of positive research in accounting," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 246-286, December.
    7. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 98(3), pages 371-400.
    8. S.P. Kothari & Karthik Ramanna & Douglas J. Skinner, 2009. "Implications for GAAP from an Analysis of Positive Research in Accounting," Harvard Business School Working Papers 09-137, Harvard Business School, revised Sep 2010.
    9. Ramanna, Karthik, 2008. "The implications of unverifiable fair-value accounting: Evidence from the political economy of goodwill accounting," Journal of Accounting and Economics, Elsevier, vol. 45(2-3), pages 253-281, August.
    10. 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.
    11. Young, Joni J., 2006. "Making up users," Accounting, Organizations and Society, Elsevier, vol. 31(6), pages 579-600, August.
    12. Oona Hathaway, "undated". "Path Dependence in the Law: The Course and Pattern of Legal Change in a Common Law System," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1002, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
    13. Sunder, Shyam, 0. "Adverse effects of uniform written reporting standards on accounting practice, education, and research," Journal of Accounting and Public Policy, Elsevier, vol. 29(2), pages 99-114, March.
    14. Segal, Jeffrey A. & Cover, Albert D., 1989. "Ideological Values and the Votes of U.S. Supreme Court Justices," American Political Science Review, Cambridge University Press, vol. 83(2), pages 557-565, June.
    15. Brandon Gipper & Brett J Lombardi & Douglas J Skinner, 2013. "The politics of accounting standard-setting: A review of empirical research," Australian Journal of Management, Australian School of Business, vol. 38(3), pages 523-551, December.
    16. McLeay, Stuart & Ordelheide, Dieter & Young, Steven, 2000. "Constituent lobbying and its impact on the development of financial reporting regulations: evidence from Germany," Accounting, Organizations and Society, Elsevier, vol. 25(1), pages 79-98, January.
    17. Jiang, John (Xuefeng) & Wang, Isabel Yanyan & Wangerin, Daniel D., 2018. "How does the FASB make decisions? A descriptive study of agenda-setting and the role of individual board members," Accounting, Organizations and Society, Elsevier, vol. 71(C), pages 30-46.
    18. Tripathi, Micky & Ansolabehere, Stephen & Snyder, James M., 2002. "Are PAC Contributions and Lobbying Linked? New Evidence from the 1995 Lobby Disclosure Act," Business and Politics, Cambridge University Press, vol. 4(2), pages 131-155, August.
    19. George Georgiou, 2004. "Corporate Lobbying on Accounting Standards: Methods, Timing and Perceived Effectiveness," Abacus, Accounting Foundation, University of Sydney, vol. 40(2), pages 219-237, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Roland Königsgruber, 2013. "Expertise-based lobbying and accounting regulation," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 17(4), pages 1009-1025, November.
    2. Jiang, John (Xuefeng) & Wang, Isabel Yanyan & Wangerin, Daniel D., 2018. "How does the FASB make decisions? A descriptive study of agenda-setting and the role of individual board members," Accounting, Organizations and Society, Elsevier, vol. 71(C), pages 30-46.
    3. Brandon Gipper & Brett J Lombardi & Douglas J Skinner, 2013. "The politics of accounting standard-setting: A review of empirical research," Australian Journal of Management, Australian School of Business, vol. 38(3), pages 523-551, December.
    4. Rolf Uwe Fülbier & Thorsten Sellhorn, 2023. "Understanding and improving the language of business: How accounting and corporate reporting research can better serve business and society," Journal of Business Economics, Springer, vol. 93(6), pages 1089-1124, August.
    5. Ramanna Karthik, 2013. "The International Politics of IFRS Harmonization," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(2), pages 1-46, January.
    6. Jannis Bischof & Holger Daske & Christoph J. Sextroh, 2020. "Why Do Politicians Intervene in Accounting Regulation? The Role of Ideology and Special Interests," Journal of Accounting Research, Wiley Blackwell, vol. 58(3), pages 589-642, June.
    7. Hans B. Christensen & Valeri V. Nikolaev, 2017. "Contracting on GAAP Changes: Large Sample Evidence," Journal of Accounting Research, Wiley Blackwell, vol. 55(5), pages 1021-1050, December.
    8. Murphy, Tim & O’Connell, Vincent, 2017. "Challenging the dominance of formalism in accounting education: An analysis of the potential of stewardship in light of the evolution of legal education," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 44(C), pages 1-29.
    9. Marius Gros & Daniel Worret, 2016. "Lobbying and Audit Regulation in the EU," Accounting in Europe, Taylor & Francis Journals, vol. 13(3), pages 381-403, September.
    10. Giner Inchausti, Begoña, 2014. "Instituciones e intereses en conflicto ante la regulación contable internacional: el caso del sector financiero español," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 17(2), pages 143-152.
    11. 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.
    12. Polk Andreas, 2020. "What do we Know About Lobbying in Germany?," Review of Economics, De Gruyter, vol. 71(1), pages 43-79, April.
    13. Allen, Abigail & Ramanna, Karthik, 2013. "Towards an understanding of the role of standard setters in standard setting," Journal of Accounting and Economics, Elsevier, vol. 55(1), pages 66-90.
    14. William R. Kerr & William F. Lincoln & Prachi Mishra, 2014. "The Dynamics of Firm Lobbying," American Economic Journal: Economic Policy, American Economic Association, vol. 6(4), pages 343-379, November.
    15. Bertomeu, Jeremy & Magee, Robert P., 2015. "Mandatory disclosure and asymmetry in financial reporting," Journal of Accounting and Economics, Elsevier, vol. 59(2), pages 284-299.
    16. Murphy, Tim & O’Connell, Vincent & Ó hÓgartaigh, Ciarán, 2013. "Discourses surrounding the evolution of the IASB/FASB Conceptual Framework: What they reveal about the “living law” of accounting," Accounting, Organizations and Society, Elsevier, vol. 38(1), pages 72-91.
    17. Laurence Van Lent, 2012. "Discussion of The Influence of Elections on the Accounting Choices of Governmental Entities," Journal of Accounting Research, Wiley Blackwell, vol. 50(2), pages 477-494, May.
    18. Freille, S. & Avramovich, C. & Moncarz, P. & Sofietti, P., 2019. "Inside the revolving door: campaign finance, lobbying meetings and public contracts. An investigation for Argentina," Research Department working papers 1392, CAF Development Bank Of Latinamerica.
    19. Christensen, Hans B. & Liu, Lisa Yao & Maffett, Mark, 2020. "Proactive financial reporting enforcement and shareholder wealth," Journal of Accounting and Economics, Elsevier, vol. 69(2).
    20. Paul André & Andrei Filip & Luc Paugam, 2015. "The Effect of Mandatory IFRS Adoption on Conditional Conservatism in Europe," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(3-4), pages 482-514, April.

    More about this item

    Keywords

    Accounting standards; Conceptual framework; Financial Accounting Standards Board (FASB); Ideology; Standard setting;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:reaccs:v:24:y:2019:i:1:d:10.1007_s11142-018-9478-7. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.