Accounting PAC Contributions and Committee Speech during the 107th U.S. Congress

Abstract

This study tests the hypothesis that political action committee (PAC) contributions paid by the accounting profession are indirectly associated with the speech performance of congressional committee members debating issues related to auditor independence during the 107th Congress (2001–2002). The hypothesis is based on the assumption that PAC contributions represent payments for access to lobby legislators and a theory of lobbying as legislative subsidy that predicts legislators who are granted legislative subsidies will increase their participation and effort. Legislative effort is measured as the qualitatively coded speech counts of 126 individual committee members during 17 hearings related to financial auditing held over 21 days by 6 committees of the U.S. House of Representatives. The results indicate a positive association between aggregate PAC contributions paid by the Big 5 and the American Institute of Certified Public Accountants (AICPA) and anti-regulatory speech counts of House committee members. No association was found for aggregate contributions and pro-regulatory speech counts. Results are mixed when PAC contributions are disaggregated by funding source indicating heterogeneity among firms in their contribution patterns.

Ethics and public accounting firms: Something old, something new

“…Firm personnel also lobby individually, targeting their contributions to political campaigns and particularly to members of congressional committees that oversee the audit industry (Elemes & Chen, 2022). On top of campaign contributions, the accounting profession pursues a long-term, coordinated and directed political strategy that spans multiple issues, evidenced where the accounting profession is called to provide expert opinions and testimony in government hearings regarding reforms around audit and professional practice (Roberts et al, 2003;Thornburg, 2013;Thornburg & Roberts, 2008). Baudot et al (2017) show that the accounting profession's political strategies change depending on the legislative issue being considered and its perceived impact on professional jurisdiction, control over professional authority and the economic status of the profession/firm.…”