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Wednesday, November 28, 2012

Richardson on Regulation Competition in Accounting

Alan J. Richardson of the Schulich School of Business, York University, writes in the March 2011 issue of the Accounting History Review on "Regulatory competition in accounting: A history of the Accounting Standards Authority of Canada."

Another one for the low law fans and those interested in the 1980s. As I think I have mentioned before, I don't understand why accounting and auditing are not given more attention by legal historians. Other than maybe that accounting, like math, is hard :). And kind of dry. With statistical models. And likely to be published in journals that are out of the usual ambit of legal academics and historians.... 

But for the very smart, hardy, or economically trained, there's this.

This article examines a unique period (1981-1998) in Canadian accounting standard-setting history when, nominally, two competing standard-setting bodies existed: the Canadian Institute of Chartered Accountants and the nascent Accounting Standards Authority of Canada. Sunder (2002a, 2002b) advocates competing accounting standard-setting regimes within a single jurisdiction to allow firms to voluntarily select standards that reflect their business model and provide the lowest cost-of-capital. This situation, however, is rare and has not been examined empirically. The existence of competing standards assumes the existence of competing standard-setters, but the entry of a new standard-setter into the domain of an existing standard-setter faces numerous obstacles. The analysis of this case suggests some factors missing from Sunder's model. 

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