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Practices of standard-setting – An analysis of the IASB's and FASB's process of identifying the objective of financial reporting

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  • Pelger, Christoph

Abstract

In their revised conceptual frameworks, the IASB and FASB pronounce that in their view valuation usefulness is the single objective of financial reporting. The present paper addresses the question how this decision was made by the boards and why stewardship was not identified as a separate objective. Drawing on Flyvbjerg's work on rationality and power, the paper analyses the practices of standard-setting in the specific case of the framework revision. The qualitative empirical study is based on the material which is publicly available from the due process of the IASB and FASB and also builds on interviews with board members, staff members and constituents. This paper finds that the decision usefulness programme, developed in the US in the 1970s, was the body of knowledge which primarily shaped and limited the debates during the framework revision. While decision usefulness was taken for granted by all participants, even by those who were arguing for a separate stewardship objective, no alternative rationality or programme associated with stewardship was discussed in the standard-setting arena. The paper also shows that a “mundane” organisational structure put the staff in a crucial position to influence board debates and sheds light on how disciplinary and self-disciplinary techniques affected board members' decision-making in the framework project.

Suggested Citation

  • Pelger, Christoph, 2016. "Practices of standard-setting – An analysis of the IASB's and FASB's process of identifying the objective of financial reporting," Accounting, Organizations and Society, Elsevier, vol. 50(C), pages 51-73.
    • Handle: RePEc:eee:aosoci:v:50:y:2016:i:c:p:51-73
    DOI: 10.1016/j.aos.2015.10.001
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    Cited by:

    1. Himick, Darlene & Brivot, Marion, 2018. "Carriers of ideas in accounting standard-setting and financialization: The role of epistemic communities," Accounting, Organizations and Society, Elsevier, vol. 66(C), pages 29-44.
    2. Pucci, Richard & Skærbæk, Peter, 2020. "The co-performation of financial economics in accounting standard-setting: A study of the translation of the expected credit loss model in IFRS 9," Accounting, Organizations and Society, Elsevier, vol. 81(C).
    3. Stenka, Renata & Jaworska, Sylvia, 2019. "The use of made-up users," Accounting, Organizations and Society, Elsevier, vol. 78(C).
    4. Anthony D. Miller & David Oldroyd, 2018. "An Economics Perspective on Financial Reporting Objectives," Australian Accounting Review, CPA Australia, vol. 28(1), pages 104-108, March.
    5. Murphy, Tim & O’Connell, Vincent, 2017. "Challenging the dominance of formalism in accounting education: An analysis of the potential of stewardship in light of the evolution of legal education," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 44(C), pages 1-29.
    6. Baudot, Lisa & Cooper, David J., 2022. "Regulatory mandates and responses to uncomfortable knowledge: The case of country-by-country reporting in the extractive sector," Accounting, Organizations and Society, Elsevier, vol. 99(C).
    7. Mantzari, Elisavet & Georgiou, Omiros, 2019. "Ideological hegemony and consent to IFRS: Insights from practitioners in Greece," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 59(C), pages 70-93.
    8. Yasmine Chahed, 2021. "Words and Numbers: Financialization and Accounting Standard‐Setting in the United Kingdom," Contemporary Accounting Research, John Wiley & Sons, vol. 38(1), pages 302-337, March.
    9. Christoph Pelger & Nicole Spieß, 2017. "On the IASB’s construction of legitimacy – the case of the agenda consultation project," Accounting and Business Research, Taylor & Francis Journals, vol. 47(1), pages 64-90, January.
    10. Kettunen, Jaana, 2017. "Interlingual translation of the International Financial Reporting Standards as institutional work," Accounting, Organizations and Society, Elsevier, vol. 56(C), pages 38-54.
    11. Gilbert, Christine, 2021. "Debt, accounting, and the transformation of individuals into financially responsible neoliberal subjects," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 77(C).

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