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Expertise-based lobbying and accounting regulation

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Abstract

It has long been recognised that accounting regulation is not a mere technical exercise but one that takes place in a political context and lobbying has been examined in numerous empirical studies. Most of these studies address lobbying of the accounting standard setter. However, standard setting is embedded in a political and institutional context. In their decision-making, these institutions depend on the expertise of potentially self-interested lobbyists. This expertise-provision element tends to be ignored in most lobbying studies. The present paper proposes an analytical model of lobbying of an accounting regulator that explicitly focuses on the provision of relevant information by lobbyists. It suggests that lobbying will generally be non-controversial, i.e. either those opposed to a standard will lobby or those favouring it, but not both. Analysis of the model furthermore implies an important role for the regulator’s ex ante leanings, both perceived and real, even when the regulator treats all information received impartially. This implies an important role for the institutional context of accounting regulation.

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Notes

  1. The empirical literature on lobbying in accounting standard setting is quite extensive. Recent reviews are provided by Königsgruber (2009) and Zülch et al. (2009). Other authors propose different classification schemes to organize the literature. Durocher et al. (2007) distinguish studies informed by positive accounting theory, by the economic theory of democracy and by theories of coalition building. Similarly, Jorissen et al. (2006) put the first two in one category of cost-and-benefit-based lobbying and distinguish this from a theoretical framework assuming a non-pluralistic process dominated by a few powerful groups. Elbannan and McKinley (2006) identify two streams, one emphasising the relation between lobbying behaviour and the effect of a proposed standard on net income and the other examining the relation between firm characteristics and lobbying. From a methodological standpoint, papers by Amershi et al. (1982) and Chung (1999) are noteworthy for being attempts to use analytical modelling to gain insight into lobbying in the context of accounting regulation.

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  1. Center for Accounting Research, University of Graz, Universitätsstraße 15/FE, 8010, Graz, Austria

    Roland Königsgruber

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Königsgruber, R. Expertise-based lobbying and accounting regulation. J Manag Gov 17, 1009–1025 (2013). https://doi.org/10.1007/s10997-012-9210-0

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