TOWARD AN EMPIRICAL INSTITUTIONAL GOVERNANCE THEORY: Analyses of the Decisions by the 50 U.S. State Governments to Adopt Generally Accepted Accounting Principles
Corporate Ownership & Control, Vol. 4, Issue 4, Summer 2007, pp. 30-46.
53 Pages Posted: 30 Jul 2008 Last revised: 20 Feb 2018
Date Written: July 27, 2008
We develop and empirically test an institutional governance theory for explaining the decisions by the 50 US State Governments to adopt Generally Accepted Accounting Principles( GAAP) for external financial reporting. Governmental accounting studies have generally explained the choice of an accounting method in terms of the economic consequences of these choices for managerial welfare and other microeconomic determinants of those decisions. Our study develops an institutional governance theory and demonstrates that institutional governance variables in conjunction with traditional economic agency variables can improve the explanatory power of government accounting choice models. Our empirical results are consistent with the stipulations of the institutional governance theory.
Keywords: Institutional Theory, Agency Theory, Corporate Governance, GAAP, State Governments, Political Science, Political Economy, Institutional Economics
JEL Classification: C10, G3, C93, E11, G38, H10, H11, L3, L51, M1, M4, M40, M41, M49, P16
Suggested Citation: Suggested Citation