The Politics of Accounting Regulation

The Politics of Accounting Regulation

Organizing Transnational Standard Setting in Financial Reporting

Sebastian Botzem

The global financial crisis underlines the relevance of accounting standards as much more than instrumental rules for corporate reporting. This important book details the accounting standards that embody societal and professional values and contribute to the distribution of financial benefits that put international harmonization of standards into the limelight. Sebastian Botzem reveals that international standards have emerged after decades of contest and political bargaining, which resulted in closely aligned standards, voluntary consultation procedures and a network structure comprising actors mainly stemming from global auditing firms, regulators and international organizations.

Chapter 7: The Politics of Transnational Accounting Regulation

Sebastian Botzem

Subjects: economics and finance, financial economics and regulation, international accounting, politics and public policy, international politics, regulation and governance


Recent financial, economic, and political crises have put the crossborder regulation of economic affairs into the limelight. Vibrant discussions are taking place about how rules and regulation might be shaped to address the flaws of global financialized capitalism. However, three years after the collapse of Lehman Brothers, when everyone briefly paused for breath because the very survival of the global financial system seemed at stake, the picture is rather mixed: Serious change in financial regulation appears to be slow, cumbersome, and incremental at best. This is equally true for accounting where, for a short while, the content of International Financial Reporting Standards and the organizational configuration of the IASB made it into business press headlines and the G20 summit documents. Transnational accounting standardization was discussed far beyond the small circles of experts that usually debate business combinations, operating segments, or fair value measurement. Most important, public deliberations revealed the political nature not only of accounting standards but also of the procedures of standard setting. After a brief period of public discourse, outrage appears to have calmed down. However, empirical scrutiny of transnational accounting standardization shows that paying close attention is merited now more than ever. Organizational aspects of accounting regulation are particularly instructive and help us to understand the emergence of the IASB and the dominant position it enjoys today. In this book, I have analyzed the interrelated changes in norms, organizational procedures, and actor constellations to explain developments in accounting standardization over the past four decades. The reconstruction of...

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