Lobbying behaviour and the development of international accounting standards

Abstract

This paper studies the role of lobbying in an international (i.e., harmonization) accounting standards setting and examines the IASC's process of promulgating International Accounting Standard (IAS) 31, 'Financial Reporting of Interests in Joint Ventures'. Our study begins with an examination of the Exposure Draft (ED 35, 'Financial Reporting of Interests in Joint Ventures') preceding IAS 31 and analyses the lobbying efforts observed during the promulgation process. Consistent with prior literature, the paper analyses lobbyists and their lobbying positions. During the time frame of the study (1989 and 1990), the IASC changed its due process, which affords us the opportunity also to analyse the IASC's strategic approach to public input. Accordingly, this study incorporates aspects of institutional theory as it relates to strategic choice by organizations. The comment letters received by the IASC regarding ED 35 were analysed using a form of content analysis. The analyses generally support the hypothesized relationships; namely, lobbying firms tend to be very large, and they lobby against any change in the status quo; professional and trade organizations lobby on behalf of their constituents and tend to support the majority positions held by those constituents; and the regulatory body (IASC) seeks acceptance from its constituency by adapting its position to that which is more palatable to the lobbyists. The interaction between respondents and the IASC is consistent with an institutional theory explanation of organizational change and adaptation to environment pressures. Few individual firms lobbied the IASC Rather, the bulk of the respondents to ED 35 were professional associations and organizations. The result contrasts markedly with both our expectations and prior research involving lobbying of the FASB. The dearth of corporate respondents to ED 35 implies that multinational corporations do not yet see the IASC as a serious regulatory organization. Further, few legal, governmental or regulatory organizations required compliance with IASs during 1989 and 1990, when IAS 31 was being deliberated,

Lobbying na Regulação Contábil: Evidências do Setor Petrolífero

“…More recently, the process of lobbying on accounting regulation has been studied from the perspective of institutional theory (Bengtsson, 2011;Chatham, Larson and Vietze, 2010;Fogarty, 1992;Giner and Arce, 2012;Kenny and Larson, 1993;Koh, 2011;Larson 2002Larson , 2008Larson and Kenny, 2011). This theory suggests that the actions of organizations should be understood as attempts to obtain legitimacy and to maintain credibility with external constituents (Fogarty, 1992).…”

“…The solicitation of comments on its products (accounting standards) from interested parties is one strategy employed by the IASB in its quest for legitimacy (Kenny and Larson, 1993).…”

“…The studies on lobbying in accounting regulation can be considered a subset of the studies on accounting choice (Francis, 1987;Kenny and Larson, 1993) because, according to Francis (2001), lobbying activities represent only one dimension of accounting choice.…”

“…Institutional theory places organizations within a social setting and explicitly recognizes the influence of the external social environment on the internal activities of an organization, which seeks to obtain legitimacy or to retain social acceptance (Kenny and Larson, 1993).…”

“…This research strategy has been used to identify the reasons for lobbying and the lobbying strategies adopted by various interest groups in numerous studies, including the studies of Dhaliwal (1982), Sutton (1984), Francis (1987), Deakin (1989), Kenny and Larson (1993), Tutticci, Dunstan and Holmes (1994), Weetman, Davie and Collins (1996), Georgiou and Roberts (2004), Asekomeh, Russel and Tarbert (2006), Hansen (2011) and Ginner and Arce (2012), among others.…”