The Economics and Politics of Accounting

Abstract The book focuses on key issues in accounting, setting them in the context of current accounting debates and trends. It makes the point that although, for the most part, we have accepted the impartiality and objectivity of accounting, we have not recognized how accounting systems are embedded in a country’s economic and legal framework, much of which is in turn shaped by political processes. This web of interactions results in complex economic and political questions that require accounting researchers to focus on several related trends: information economics, regulatory economics, sociology, and political science. Although considerable progress has been made, many fundamental questions are still subject to debate, and in the book leading international scholars address a number of these: what is the role of accounting in security valuation, decision making, and contracting; what can we learn from economics-based research in accounting; what is the role of auditing and how can accounting standards be enforced; what are the cost and benefits of accounting and disclosure regulation; what is the role of accounting in society; how does lobbying affect the political process of standard setting; and what are the consequences of the internationalization of standard setting?