Journal article
Explaining Rules-Based Characteristics in US GAAP: Theories and Evidence
Journal of accounting research, Vol.54(3), pp.827-861
06/2016
DOI: 10.1111/1475-679X.12112
Abstract
Despite debate on the desirability of rules-based standards, no studies provide evidence on why accounting standards take on rules-based characteristics. We identify and test five theories from prior research (litigation risk, constraining opportunism, complexity, transaction frequency, and age) that could explain why some U.S. accounting standards contain rules-based characteristics. Litigation risk and complexity are most consistently related to cross-sectional and time-series variation in rules-based characteristics. We find more limited evidence that frequent transactions, age, and desires by regulators to constrain opportunistic reporting are related to rules-based standards. We note, however, that our findings are necessarily descriptive because standards arise endogenously from market and political forces, limiting causal interpretation. Further, it is difficult to perfectly separate rules-based characteristics of the standard from both the complexity of the standard and the characteristics of the underlying transaction, including the complexity of the transaction.
Details
- Title: Subtitle
- Explaining Rules-Based Characteristics in US GAAP: Theories and Evidence
- Creators
- Dain C. Donelson - The University of Texas at AustinJohn Mcinnis - The University of Texas at AustinRichard D. Mergenthaler - University of Iowa
- Resource Type
- Journal article
- Publication Details
- Journal of accounting research, Vol.54(3), pp.827-861
- Publisher
- Wiley
- DOI
- 10.1111/1475-679X.12112
- ISSN
- 0021-8456
- eISSN
- 1475-679X
- Number of pages
- 35
- Grant note
- University of Texas at Austin University of Iowa
- Language
- English
- Date published
- 06/2016
- Academic Unit
- Accounting; Law Faculty
- Record Identifier
- 9984380542202771
Metrics
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