Abstract
This paper examines the process that drives the formation and evolution of disclosure regulations. In equilibrium, changes in the regulation depend on the status quo, standard-setters’ political accountability and underlying objectives, and the cost and benefits of disclosure to reporting entities. Excessive political accountability need not implement the regulation preferred by diversified investors. Political pressures slow standard-setting and, if the standard-setter prefers high levels of disclosure, induce regulatory cycles characterized by long phases of increasing disclosure requirements followed by a sudden deregulation.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 775-802 |
| Number of pages | 28 |
| Journal | Review of Accounting Studies |
| Volume | 20 |
| Issue number | 2 |
| DOIs | |
| State | Published - Jun 1 2015 |
Funding
Jeremy Bertomeu acknowledges financial support from the PSC-CUNY Research Award Program. We would like to thank seminar participants at the AAA meetings, D-CAF meetings in Copenhagen, the Accounting Research Workshop in Fribourg, Tel Aviv University, University of Illinois at Chicago and Northwestern University. We thank Anup Srivastava, Sri Sridhar, Donal Byard, Steve Ryan, Robert Herz, Ron Dye, Eti Einhorn, Ian Gow, Pingyang Gao, Peter Sorensen, Hans Frimor, Carolyn Levine, Edwige Cheynel, Enrique de la Rosa, Jack Hughes, Isabel Wang, Robert Bloomfield, Karthik Ramanna, Tjomme Rusticus, John Christensen, Sivan Frenkel, Jon Glover, Pierre Liang, Tom Lys, Qi Chen, Froystein Gjesdal, Jim Ohlson, Judson Caskey, Ram Ramakrishnan, Mike Kirschenheiter, Xiaoyan Wen, Somnath Das, Carlos Corona, Robert Lipe, Ivan Marinovic, David Austen-Smith, Michael Fishman and Georg Schneider for their valuable advice. All remaining errors are our own.
Keywords
- Certification
- Disclosure
- Financial reporting
- Mandatory
- Political
- Positive economics
- Standard
ASJC Scopus subject areas
- Accounting
- General Business, Management and Accounting
