Agenda Setting at the FASB: Evidence from the Role of the FASAC

Abstract

I examine the extent to which the FASB’s agenda determination is a function of the contemporaneous priorities expressed by its primary constituents: auditors, preparers, and financial statement users. Using the FASB’s consultation with the FASAC as a lens through which to view constituent priorities, I find evidence that from 1982 to 2001 influence on FASB agenda decisions is concentrated among “Big N” audit firms, whereas from 2002 to 2006 the priorities of financial constituents appear most significant. Across both periods, I find no evidence of significant preparer influence in agenda formation, which is in contrast to their documented role in later stages of standard setting. Collectively, the results contribute to our understanding of the influence of constituents in standard setting and highlight a shift in that influence over time.

Keywords: Standard Setting, FASB, Lobbying, Agenda Formation

JEL Classification: M41, M48