Accounting Standards and the Economics of Standards

43 Pages Posted: 28 Jul 2008

See all articles by Geoff Meeks

Geoff Meeks

University of Cambridge - Judge Business School

G. M. Swann

Nottingham University Business School

Date Written: July 28, 2008

Abstract

The paper draws on the economics of standards to inform current debates on international accounting standards. It traces the benefits claimed for standards - their contribution to the division of labour, innovation, trust, etc.; and the costs, including entry barriers and compliance costs. It illustrates these benefits and costs with cases from accounting regulation. It adopts two approaches to the question whether accounting regulation is best achieved by a single set of standards for the world, or by competing systems. The first approach focuses on contributions in economics, including the theory of standards races and of optimal variety. In these analyses, only in special circumstances has a single standard emerged as the superior outcome. The second approach introduces evidence from accounting and finance on the problems of translating with globalised financial markets, and on the relative costs and benefits of multiple standard-setters or a single global scheme. The most compelling net benefits of harmonisation arise for small economies moving from idiosyncratic to international standards.

Keywords: international accounting regulation, economics of standards

JEL Classification: G14, G18, M14, M41, M44, M47

Suggested Citation

Meeks, Geoff and Swann, G. M., Accounting Standards and the Economics of Standards (July 28, 2008). Available at SSRN: https://ssrn.com/abstract=1182042 or http://dx.doi.org/10.2139/ssrn.1182042

Geoff Meeks (Contact Author)

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom
+44 (0) 1223 764226 (Phone)
+44 (0) 1223 339701 (Fax)

G. M. Swann

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

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