Income Tax Accounting Policy Choice: Exposure Draft Responses and the Early Adoption Decision by Canadian Companies
53 Pages Posted: 29 Sep 2006
We extend prior literature through a detailed examination of the relationship between lobbying behaviour and subsequent accounting standard adoption timing, using changes to a Canadian accounting standard with a prolonged transition period. We develop a model linking lobbying and adoption timing, and test hypotheses based upon recontracting costs, information production costs, efforts to manage investor perceptions and corporate governance practices. Our findings indicate that early adoption appears to be most prevalent for firms that benefit from improved financial statement performance. In contrast, late adopters tend to be firms that have lobbied standard setters regarding the out-of-pocket costs of the standard and those that rate highly on certain Corporate Governance measures.
Keywords: Lobbying, Early adoption, Income taxes, Corporate governance
JEL Classification: G35, M41, M44, G38
Suggested Citation: Suggested Citation