Accounting standards-setting in the U.S. An analysis of power and social exchange

Mohamed Elmuttassim Hussein, John Edward Ketz

Research output: Contribution to journalArticle

31 Citations (Scopus)

Abstract

The Metcalf Committee stated in The Accounting Establishment (U.S. Senate, 1976) that Big Eight public accounting firms dominate the Financial Accounting Standards Board (FASB). This paper argues that structural and rational constraints limit the ability of the Big Eight and big business to dominate the FASB. Conflict among independent public accountants, managers, investors, creditors, and others exists because of mutually irreconcilable goals. However, none of these political actors controls the standard setting process. Thus, the accounting rule making process is a "mixed power system" (Bonoma 1976, pp. 503-507). The FASB originated as a social contract among parties interested in the determination of accounting rules. The FASB acts to resolve conflicts among these groups, to promote cooperation among them, and to build consensus.

Original languageEnglish (US)
Pages (from-to)59-81
Number of pages23
JournalJournal of Accounting and Public Policy
Volume10
Issue number1
DOIs
StatePublished - Jan 1 1991

Fingerprint

creditor
Social exchange
Accounting standard setting
Financial accounting standards
political actor
senate
investor
manager
firm
ability
Group
Public accounting firms
Accountants
Power system
Social contract
Managers
Investors

All Science Journal Classification (ASJC) codes

  • Accounting
  • Sociology and Political Science

Cite this

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Accounting standards-setting in the U.S. An analysis of power and social exchange. / Elmuttassim Hussein, Mohamed; Ketz, John Edward.

In: Journal of Accounting and Public Policy, Vol. 10, No. 1, 01.01.1991, p. 59-81.

Research output: Contribution to journalArticle

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