Corporate Influence on FASB Decision Making: The Case of GPLA

30 Pages Posted: 1 May 2009 Last revised: 20 Feb 2018

See all articles by Lawrence D. Brown

Lawrence D. Brown

Temple University - Department of Accounting

Ehsan H. Feroz

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

Date Written: May 1, 2009

Abstract

The Financial Accounting Standards Board (FASB) follows an elaborate due-process procedure when it sets accounting standards. Surprisingly, little is known regarding what role submissions before the FASB play in the FASB's decision making process. This study examines one set of FASB decisions, changes between its 1974 and 1978 Exposure Drafts on price-level accounting, and relates it to firm specific characteristics suggested by economic theory. The model suggests that a corporation's influence on the FASB is positively related to its resources, the number of diverse constituencies it represents, and its previous success at influencing regulators. Proxies for theses factors are the firm's 1974 net sales, the number of lines of business it disclosed in its 1974 10-K reports, and its 1974 tax subsidy, respectively. The resources and the number of lines of business variables are found to be significant determinants of corporate influence. The results suggest that corporations do influence FASB decision making, and that some corporations are more influential than others.

Keywords: FASB, Lobbying, Influence, Regulation, Political Economy

JEL Classification: D72, G18, G38, K23, L30, L51, M41

Suggested Citation

Brown, Lawrence D. and Feroz, Ehsan H., Corporate Influence on FASB Decision Making: The Case of GPLA (May 1, 2009). Journal of Business Finance and Accounting, Vol. 19, No. 5, September 1992. Available at SSRN: https://ssrn.com/abstract=1397722

Lawrence D. Brown

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Ehsan H. Feroz (Contact Author)

University of Washington, Milgard School of Business-Accounting ( 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, Labovitz School of Business-Department of Accounting ( email )

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

University of Minnesota, Carlson School of Management-Department of Accounting ( email )

420 Delaware St. SE
Minneapolis, MN 55455
United States

American Accounting Association ( email )

5717 Bessie Drive
Sarasota, FL 34233-2399
United States

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