TY - JOUR
T1 - Moving toward a principle-based approach to U.S. accounting standard setting
T2 - A demand for procedural justice and accounting reform
AU - Bailey, Wendy J.
AU - Sawers, Kimberly M.
N1 - Funding Information:
We thank Elizabeth Almer, Denise Daniels, Livia Markoczy and two anonymous reviewers for the ABO conference for helpful comments on earlier drafts. Helpful comments on earlier drafts were provided by workshop participants at Seattle Pacific University, at the ABO conference, at the Fourth Annual Conference on New Perspectives in Accounting Research, and at the Advances in Accounting Conference. Early financial support was provided by the University of California, Riverside Academic Senate Research Fund .
Publisher Copyright:
© 2018 Elsevier Ltd
PY - 2018/11
Y1 - 2018/11
N2 - In the wake of numerous accounting scandals in the early 2000s, the U.S. began considering a move away from a more rule-based approach to accounting standard setting and toward a more principle-based approach to accounting standard setting. Although it is often assumed that this move toward a more principle-based approach is driven by stakeholder preferences, we examine whether this move is driven by demands for procedural justice. Specifically, we analyze one hundred and two comment letters submitted in response to the Financial Accounting Standard Board (FASB) proposal for principle-based standards. We find respondents from different stakeholder groups (preparers, accounting professionals, regulators, users, and academia) do not express a unified preference for rule-based or principle-based standards. We do, however, find that respondents identify benefits and costs of principle-based standards that map into the six elements of fair procedures (representativeness, accuracy, bias suppression, consistency ethicality, correctability). These elements are significantly associated with both the respondent's degree of support for the FASB proposal and the perceived quality of principle-based standards.
AB - In the wake of numerous accounting scandals in the early 2000s, the U.S. began considering a move away from a more rule-based approach to accounting standard setting and toward a more principle-based approach to accounting standard setting. Although it is often assumed that this move toward a more principle-based approach is driven by stakeholder preferences, we examine whether this move is driven by demands for procedural justice. Specifically, we analyze one hundred and two comment letters submitted in response to the Financial Accounting Standard Board (FASB) proposal for principle-based standards. We find respondents from different stakeholder groups (preparers, accounting professionals, regulators, users, and academia) do not express a unified preference for rule-based or principle-based standards. We do, however, find that respondents identify benefits and costs of principle-based standards that map into the six elements of fair procedures (representativeness, accuracy, bias suppression, consistency ethicality, correctability). These elements are significantly associated with both the respondent's degree of support for the FASB proposal and the perceived quality of principle-based standards.
KW - Principle-based standards
KW - Procedural justice
KW - Rule-based standards
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U2 - 10.1016/j.adiac.2018.07.006
DO - 10.1016/j.adiac.2018.07.006
M3 - Article
AN - SCOPUS:85050946153
SN - 0882-6110
VL - 43
SP - 1
EP - 13
JO - Advances in Accounting
JF - Advances in Accounting
ER -