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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: 27 Aug 2014

Vivian L. Carpenter

Atwater Entertainment

Rita Hartung Cheng

Northern Arizona University; University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business

Ehsan H. Feroz

University of Washington, Tacoma - Milgard School of Business; University of Illinois at Urbana-Champaign; Government of the United States of America - US GAO Advisory Council; University of Minnesota - Duluth - Department of Accounting; American Accounting Association

Date Written: July 27, 2008

Abstract

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, Institutional Economics

JEL Classification: C10, E11, G3, H10, L3, L51, M4

Suggested Citation

Carpenter, Vivian L. and Cheng, Rita Hartung and Feroz, Ehsan H., TOWARD AN EMPIRICAL INSTITUTIONAL GOVERNANCE THEORY: Analyses of the Decisions by the 50 U.S. State Governments to Adopt Generally Accepted Accounting Principles (July 27, 2008). Corporate Ownership & Control, Vol. 4, Issue 4, Summer 2007, pp. 30-46.. Available at SSRN: https://ssrn.com/abstract=1181364

Vivian L. Carpenter

Atwater Entertainment

Detrroit, MI
United States

Rita Hartung Cheng

Northern Arizona University ( email )

PO Box 15066
Flagstaff, AZ 86011
United States

University of Wisconsin - Milwaukee - Sheldon B. Lubar School of Business ( email )

P.O. Box 742
3202 N. Maryland Ave.
Milwaukee, WI 53201-0742
United States
(414) 229-4238 (Phone)

HOME PAGE: http://www.uwm.edu/~rcheng/

Ehsan H. Feroz (Contact Author)

University of Washington, Tacoma - Milgard School of Business ( email )

1900 Commerce Street, Campus Box 358420
Tacoma, WA 98402-3100
United States
(253) 692 4728 (Phone)
253 692 4523 (Fax)

HOME PAGE: http://www.tacoma.washington.edu/business

University of Illinois at Urbana-Champaign ( email )

515 East Gregory Drive# 2307
Champaign, IL 61820
United States

Government of the United States of America - US GAO Advisory Council ( email )

441 G Street NW
Washington, DC 20548-0001
United States

University of Minnesota - Duluth - Department of Accounting ( email )

10 University Drive
Labovitz School of Business
Duluth, MN 55812
United States
218-726-6988 (Phone)
218-726-8510 (Fax)

American Accounting Association ( email )

5717 Bessie Drive
Sarasota, FL 34233-2399
United States

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