Abstract

http://ssrn.com/abstract=1617398
 
 

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Towards an Understanding of the Role of Standard Setters in Standard Setting


Abigail M. Allen


Harvard Business School

Karthik Ramanna


Harvard University - Harvard Business School

May 24, 2012

Journal of Accounting & Economics (JAE), Forthcoming
Harvard Business School Accounting & Management Unit Working Paper No. 10-105

Abstract:     
We 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.

Number of Pages in PDF File: 54

Keywords: accounting, FASB, politics, relevance, reliability, standard setting

JEL Classification: D72, D78, G18, K22, L51, M41

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Date posted: May 29, 2010 ; Last revised: May 25, 2012

Suggested Citation

Allen, Abigail M. and Ramanna, Karthik, Towards an Understanding of the Role of Standard Setters in Standard Setting (May 24, 2012). Journal of Accounting & Economics (JAE), Forthcoming; Harvard Business School Accounting & Management Unit Working Paper No. 10-105. Available at SSRN: http://ssrn.com/abstract=1617398 or http://dx.doi.org/10.2139/ssrn.1617398

Contact Information

Abigail M. Allen
Harvard Business School ( email )
Soldiers Field
Boston, MA 02163
United States
Karthik Ramanna (Contact Author)
Harvard University - Harvard Business School ( email )
Morgan 389
Boston, MA 02163
United States
HOME PAGE: http://www.hbs.edu/kramanna
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