Auditor Lobbying on Accounting Standards

60 Pages Posted: 7 Jan 2015 Last revised: 26 Mar 2018

See all articles by Abigail M. Allen

Abigail M. Allen

Brigham Young University - Marriott School

Karthik Ramanna

University of Oxford - Blavatnik School of Government

Sugata Roychowdhury

Northwestern University Kellogg School of Management

Date Written: January 22, 2018

Abstract

We examine how Big N auditors’ changing incentives impact their comment-letter lobbying on U.S. GAAP over the first thirty-four years of the FASB (1973-2006). In particular, we focus on the influence of auditors’ lobbying incentives arising from two basic factors: managing expected litigation and regulatory costs and catering to clients’ preferences for flexibility in GAAP. We find evidence that auditor lobbying is driven by prevailing standards of litigation and regulatory scrutiny, but we find no evidence that catering to clients’ preferences for flexibility in GAAP drives auditor lobbying. Broadly, our paper offers the first large-sample descriptive analysis of the role of Big N auditors in the accounting standard-setting process.

Keywords: Auditors, FASB, GAAP, Lobbying, Litigation

JEL Classification: D72, G18, M41, M42, M48, K22

Suggested Citation

Allen, Abigail M. and Ramanna, Karthik and Roychowdhury, Sugata, Auditor Lobbying on Accounting Standards (January 22, 2018). Journal of Law, Finance & Accounting, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2545378 or http://dx.doi.org/10.2139/ssrn.2545378

Abigail M. Allen

Brigham Young University - Marriott School ( email )

Provo, UT
United States

Karthik Ramanna (Contact Author)

University of Oxford - Blavatnik School of Government ( email )

Radcliffe Observatory Quarter
Oxford, Oxfordshire OX2 6GG
United Kingdom

Sugata Roychowdhury

Northwestern University Kellogg School of Management ( email )

2211 Campus Drive
Evanston, IL IL 60208
United States
60208 (Fax)

HOME PAGE: http://https://www.kellogg.northwestern.edu/faculty/directory/roychowdhury_sugata.aspx

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
2,271
Abstract Views
12,061
Rank
12,193
PlumX Metrics