Corporate participation in the due process of international accounting standard setting: An analysis of the antecedents
Jorissen, Ann Lybaert, Nadine Orens, Raf van der Tas, Leo
Annual Congress European Accounting Association edition:37 location:Tallinn, Estonia date:21-23 May 2014
Prior studies examining constituents’ formal participation by analysing the comment letters sent in the discussion paper and exposure draft stage of the due process revealed that preparers are the most active group in this lobbying process. With this paper we zoom in on those preparers that are active in the discussion paper and exposure draft stage of the due process of international accounting standard setting and analyse their antecedents, their overall strategy of corporate political activities (CPA) towards the standard setter and the outcome of this CPA. By combining insights from the management literature on corporate political activities with the results of the participation literature on accounting standard setting, we develop hypotheses on the influence of firm-level, industry-level and institutional antecedents on the propensity of individual corporate preparers to contribute to the standard setting process of the IASB by using an information strategy and/or a financing strategy. Based on the comparison of the profile of companies engaging in a relational information strategy versus a transactional information strategy (or being habitual versus occasional participating preparers), we observe a significant association between firm size, available firm slack, regulated -industry origin and originating from an institutional background characterized by high quality enforcement and the engagement in a relational information strategy (= habitual lobbyer) towards the IASB. Moreover we notice a significant correlation between a preparer’s participation intensity in the discussion paper and exposure draft phase of the due process and the decision to engage in a financing strategy. Considering the membership of committees in the international accounting standard setting structure as an outcome of the CPA then we observe that a financing strategy is more effective for obtaining a seat on one of the committees than the writing of comment letters. Over the period 1995-2012 we notice that corporate preparers being frequent lobbyers towards the IASB stem from G4+1 countries, Germany or Switzerland.