Toward a Positive Theory of Disclosure Regulation: In Search of Institutional Foundations
46 Pages Posted: 23 Sep 2012 Last revised: 17 Aug 2013
Date Written: September 22, 2012
Abstract
This article develops a theory of standard-setting in which accounting standards emerge endogenously from an institutional bargaining process. It provides a unified framework with investment and voluntary disclosure to examine the links between regulatory institutions and accounting choice. Disclosure rules tend to be more comprehensive when controlled by a self-regulated professional organization than when they are under the direct oversight of elected politicians. These institutions may not implement standards desirable to diversified investors and, when voluntary disclosures are possible, allowing choice between competing standards increases market value over a single uniform standard. Several new testable hypotheses are also offered to explain differences in accounting regulations.
Keywords: capital market, disclosure, accounting standards, standard-setting, theory
JEL Classification: C78, D02, D04, D71, D72, D79, G28, L51, M41, M48
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Effect of International Institutional Factors on Properties of Accounting Earnings
By Ray Ball, S.p. Kothari, ...
-
The Relevance of the Value Relevance Literature for Financial Accounting Standard Setting
-
Conservatism in Accounting - Part I: Explanations and Implications
-
International Differences in the Timeliness, Conservatism and Classification of Earnings
By Peter F. Pope and Martin Walker
-
By Ray Ball, Ashok Robin, ...
-
Corporate Financial Statements, a Product of the Market and Political Processes
-
Conservatism in Accounting - Part Ii: Evidence and Research Opportunities
-
Earnings Quality in U.K. Private Firms
By Ray Ball and Lakshmanan Shivakumar