Lobbying and Uniform Disclosure Regulation
Henry L. Friedman
University of California, Los Angeles (UCLA) - Accounting Area
Mirko Stanislav Heinle
University of Pennsylvania - Accounting Department
March 7, 2016
Journal of Accounting Research, Forthcoming
This study examines the costs and benefits of uniform accounting regulation in the presence of heterogeneous firms who can lobby the regulator. A commitment to uniform regulation reduces economic distortions caused by lobbying by creating a free-rider problem between lobbying firms at the cost of forcing the same treatment on heterogeneous firms. Resolving this trade-off, an institutional commitment to uniformity is socially desirable when firms are sufficiently homogeneous or the costs of lobbying to society are large. We show that regulatory intensity for a given firm can be increasing or decreasing in the degree of uniformity, even though uniformity always reduces lobbying. Our analysis sheds light on the determinants of standard-setting institutions and their effects on corporate governance and lobbying efforts.
Number of Pages in PDF File: 43
Keywords: Disclosure, Regulation, Lobbying
JEL Classification: D72, G38, L51, M40, M41
Date posted: July 15, 2012 ; Last revised: March 10, 2016
© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.
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