Accounting for success: The Big Four as allies of finance in post crisis regulatory reform

Abstract

This paper argues that the Big Four accountancy firms-PricewaterhouseCoopers, Deloitte, Ernst & Young, KPMG-operate as key political allies of the financial sector within financial regulatory battles. Leveraging the theoretical notion of "actor plurality" within the policymaking process, I demonstrate how, in the case of the European Union Financial Transaction Tax (FTT) initiative, accountancy professionals offered crucial support for the financial sector. They did so by disseminating key oppositional claims against the FTT proposal, developing tax mitigation and relocation strategies, preparing negative impact assessments, and advising on lobbying tactics. This allied stance of the Big Four is primarily a consequence of the ways in which their commercial priorities have been fundamentally transformed by the provision of consultancy services within the modern global economy. Moreover, the paper shows how accountancy experts are deeply embedded within a network of professional relationships that fosters substantive policy alignment between the Big Four and prominent financial lobbying groups. By highlighting the overlooked role of the major accountancy firms within post crisis regulatory reform, the study illuminates the unequal power relations that permeate financialized societies and contributes to a deeper understanding of how financial preferences continue to prevail within the policymaking process.

Professional action in global wealth chains

“…While professionals have a steady relationship with their wealthy clients through a standardized portfolio of services, there has been increased pressure from regulators in recent years from forward steps in global information sharing (Eccleston & Gray 2014; Kalaitzake 2019). Yet real political intervention on the substance of ABSs has not materialized as the wealth chain services are broadly viewed as accepted or legitimate.…”

Transnational Infrastructural Power of Professional Service Firms

“…The analysis finds this resilience is underpinned by the expert infrastructures of transfer pricing, which have enabled GPSFs to (re)assert professional status and hierarchy in repelling challenges to established transfer pricing practices and institutions. Whereas prior studies have emphasized the deliberate, strategic actions of professional service firms in maintaining or resisting change to their preferred institutions of globalization (Arnold, 2005;Kalaitzake, 2019), the findings highlight a more subtle manner of resistance, which works indirectly through the taken-for-granted social systems that inform professional practice (Quack, 2007).…”

“…It may also encompass the professional work of 'intermediation' or 'translating' regulations into practice as GPSFs shape the content and implementation of, for instance, accounting regulations and standards (Fransen & LeBaron, 2019;Hasseldine et al, 2011;Herman, 2020;Kohler et al, 2021). Cases abound, illustrating the lobbying prowess of a coherent professional services sector in, e.g., shaping trade rules to create a "global market for accounting and audit services" (Arnold, 2005), trading 'cash for favours' by providing financial contributions to transnational accounting standard-setters (Mattli & Büthe, 2005), and undoing or weakening new global tax regulation aimed at client firms (R. C. Christensen, 2020;Kalaitzake, 2019). Such lobbying is perceived as a critical skill and resource for GPSFs -and other elite accounting professionals -that contributes to their prestige and status (Anesa et al, 2018, p. 27;Mulligan & Oats, 2016, p. 72).…”

“…Another strand highlights their direct power in lobbying political processes and actors. The "most well documented" tactic of GPSF power exercise (Boussebaa & Faulconbridge, 2018, p. 79), lobbying entails engaging strategically with (transnational) policy-making and regulators, exercising influence to ascertain particular outcomes, such as preferred global standards for professional services, accounting regulation and international taxation (Arnold, 2005;Kalaitzake, 2019;Morgan, 2006;Nölke, 2005).…”

Distributed fiscal relations and their imaginaries: Metaphors of redistribution and reciprocity in struggles about distributive justice in Austria

“…Power lies in understanding the legal possibilities of compartmentalizing money in and out of legal domains, a knowledge that fiscal personnel often have—professionals in tax agencies, business consultancies, or government or supranational regulatory institutions (Aalbers, 2018, 92; Kalaitzake, 2019). However, tax law is often made in supranational coordination mechanisms.…”