Real Effects Arguments in Accounting Standard Setting: Evidence from IFRS 16

58 Pages Posted: 13 Dec 2022

See all articles by Ann-Kristin Großkopf

Ann-Kristin Großkopf

University of Amsterdam Business School; TRR 266 Accounting for Transparency

Thorsten Sellhorn

Ludwig-Maximilians-Universitaet (LMU) Munich; TRR 266 Accounting for Transparency

Katharina Weiß

LMU Munich School of Management

Date Written: September 12, 2022

Abstract

This paper studies real effects arguments – claims that accounting standards causally affect preparers’ actions in the real economy – in the context of IFRS standard setting. To identify such real effects arguments, we apply semi-automated content analysis to the 426 due process documents and the 1,727 comment letters related to the IASB’s lease accounting project. Specifically, we document the real effects arguments that emerge during this process, and study when and where they originate, as well as how they diffuse through the IASB’s standard-setting process. We find that both comment letter and due process documents focus on financing real effects arguments. Yet, comment letters feature also concerns about market-wide implications. We further show that real effects arguments tend to arise via constituents’ comment letters rather than at the Board and staff’s initiative. They are brought into Board discussions only selectively via staff papers, and feature less prominently in Board deliberations, consistent with staff acting as a ‘filter’. Our study provides important insights for the upcoming Post-implementation Review, highlighting which effects analyses can fruitfully be conducted to address concerns raised by constituents.

Keywords: real effects, economic consequences, leases, IASB, standard-setting

JEL Classification: D72, G38, K20, M41, M48

Suggested Citation

Großkopf, Ann-Kristin and Sellhorn, Thorsten and Weiß, Katharina, Real Effects Arguments in Accounting Standard Setting: Evidence from IFRS 16 (September 12, 2022). TRR 266 Accounting for Transparency Working Paper Series No. 111, 2022, Available at SSRN: https://ssrn.com/abstract=4300339 or http://dx.doi.org/10.2139/ssrn.4300339

Ann-Kristin Großkopf (Contact Author)

University of Amsterdam Business School ( email )

TRR 266 Accounting for Transparency ( email )

Warburger Straße 100
Paderborn, 33098
Germany

Thorsten Sellhorn

Ludwig-Maximilians-Universitaet (LMU) Munich ( email )

Ludwigstr. 28 RG IV
Munich, Bavaria 80539
Germany
+49(0)89-21806264 (Phone)
+49(0)89-21806327 (Fax)

HOME PAGE: http://www.rwp.bwl.uni-muenchen.de/personen/professoren/sellhorn/index.html

TRR 266 Accounting for Transparency ( email )

Warburger Straße 100
Paderborn, 33098
Germany

Katharina Weiß

LMU Munich School of Management ( email )

Institute for Accounting, Auditing and Analysis
Ludwigstr. 28 RG
Munich, 80539
Germany

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