Keywords

auditors, FASB, GAAP, lobbying

Abstract

We examine how Big N auditors’ changing incentives impact their comment-letter lobbying on U.S. GAAP over the first thirty-four years of the FASB (1973–2006). In particular, we focus on the influence of auditors’ lobbying incentives arising from two basic factors: managing expected litigation and regulatory costs and catering to clients’ preferences for flexibility in GAAP. We find evidence that auditor lobbying is driven by prevailing standards of litigation and regulatory scrutiny, but we find no evidence that catering to clients’ preferences for flexibility in GAAP drives auditor lobbying. Broadly, our paper offers the first large-sample descriptive analysis of the role of Big N auditors in the accounting standard-setting process.

Original Publication Citation

Allen, A, Ramanna, K. and Roychodhury, S., 2018 Auditor Lobbying on Accounting Standards. Journal of Law, Finance and Accounting, 3(2), pp.291-331

Document Type

Peer-Reviewed Article

Publication Date

2018

Publisher

Journal of Law, Finance and Accounting

Language

English

College

Marriott School of Management

Department

Accountancy

University Standing at Time of Publication

Associate Professor

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Accounting Commons

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