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Accounting standards and the economics of standards

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  • Geoff Meeks
  • G.M. Peter Swann

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 translation 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.

Suggested Citation

  • Geoff Meeks & G.M. Peter Swann, 2009. "Accounting standards and the economics of standards," Accounting and Business Research, Taylor & Francis Journals, vol. 39(3), pages 191-210.
    • Handle: RePEc:taf:acctbr:v:39:y:2009:i:3:p:191-210
    DOI: 10.1080/00014788.2009.9663360
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    References listed on IDEAS

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    1. Babbage, Charles, 1832. "Economy of Machinery and Manufactures," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number babbage1832.
    2. Knut Blind, 2004. "The Economics of Standards," Books, Edward Elgar Publishing, number 3392.
    3. Camfferman, Kees & Zeff, Stephen A., 2007. "Financial Reporting and Global Capital Markets: A History of the International Accounting Standards Committee, 1973-2000," OUP Catalogue, Oxford University Press, number 9780199296293.
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    Cited by:

    1. Beke, Jenő & Tiszberger, Mónika, 2012. "International Accounting Standardisation in Hungarian Practice," Public Finance Quarterly, Corvinus University of Budapest, vol. 57(4), pages 412-425.
    2. Charity Mhaka, 2014. "IPSAS, A Guaranteed Way of Quality Government Financial Reporting? A Comparative Analysis of the Existing Cash Accounting and IPSAS Based Accounting Reporting," International Journal of Financial Economics, Research Academy of Social Sciences, vol. 3(3), pages 134-141.
    3. Wafaa Salah & Abdallah Abdel-Salam, 2019. "The Effects of International Financial Reporting Standards on Financial Reporting Quality," Athens Journal of Business & Economics, Athens Institute for Education and Research (ATINER), vol. 5(3), pages 221-242, July.
    4. David Procházka, 2015. "Is a Full International Accounting Convergence Desirable? [Je žádoucí úplná konvergence účetního výkaznictví?]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2015(3), pages 7-23.
    5. Oulasvirta, Lasse, 2014. "The reluctance of a developed country to choose International Public Sector Accounting Standards of the IFAC. A critical case study," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(3), pages 272-285.
    6. Aida R. Lozada Rivera, 2015. "SEDUCTIVE ROUTE TOWARDS CONVERGENCE DISCLOSURE: IFRS FOR SMEs,RUTA SEDUCTORA HACIA LA CONVERGENCIA DIVULGACION: NIIF PARA PYMES," Revista Internacional Administracion & Finanzas, The Institute for Business and Finance Research, vol. 8(2), pages 83-103.
    7. Mohd Taufik Mohd Suffian & Zuraidah Mohd Sanusi & Mohd Shatari Abd Ghafar & Effiezal Aswadi Abd Wahab, 2018. "Managing Related Party Transactions on Earnings Quality," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 8(1), pages 484-496, January.
    8. Beke, Jeno, 2010. "Business and economic aspects of accounting standardization in Hungary," Business and Economic Horizons (BEH), Prague Development Center (PRADEC), vol. 2(2), pages 1-7, July.
    9. Francesco De Luca & Jenice Prather-Kinsey, 2018. "Legitimacy theory may explain the failure of global adoption of IFRS: the case of Europe and the U.S," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 22(3), pages 501-534, September.
    10. Satoshi Taguchi & Masayuki Ueeda & Kazunori Miwa & Satoru Mizutani, 2013. "Economic Consequences of Global Accounting Convergence: An Experimental Study," The Japanese Accounting Review, Research Institute for Economics & Business Administration, Kobe University, vol. 3, pages 103-120, December.
    11. Clare Wang, 2014. "Accounting Standards Harmonization and Financial Statement Comparability: Evidence from Transnational Information Transfer," Journal of Accounting Research, Wiley Blackwell, vol. 52(4), pages 955-992, September.
    12. Anubha Srivastava & Preeti Kulshrestha, 2021. "Ind-AS Enforcement in India: An Assessment of Readiness, Benefits and Key Challenges," Paradigm, , vol. 25(1), pages 25-41, June.

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