A Political Economy of Accounting Standard Setting

Journal of Management and Governance, Vol. 14, No. 4, pp. 277-295

Posted: 28 May 2009 Last revised: 22 Jan 2014

Date Written: November 20, 2008

Abstract

In recent years accounting researchers have identified “political” lobbying as a problem for accounting standard setting. This paper presents a simple game-theoretic analysis of the political process to identify situations where companies have incentives to lobby the political principal instead of participating in the usual due process of accounting standard setting. Analysis of the model suggests that “political” lobbying is more likely to happen in the EU than in the US. Furthermore it is suggested that if the relevant standard setters wish to achieve harmonization of accounting standards between the EU and the US, European companies have more lobbying leverage than their American counterparts because there are more European veto players than American ones.

Keywords: Accounting Standards, Regulation, Political Lobbying, Veto Players

JEL Classification: M48, K20

Suggested Citation

Koenigsgruber, Roland, A Political Economy of Accounting Standard Setting (November 20, 2008). Journal of Management and Governance, Vol. 14, No. 4, pp. 277-295. Available at SSRN: https://ssrn.com/abstract=1407455

Roland Koenigsgruber (Contact Author)

SKEMA Business School ( email )

Lille
France

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