Attributes of lobbying towards the IASB: Participation, content, and success

Michael Doblera and Oliver Knospea,*

a Chair of Accounting, Auditing and Taxation, Faculty of Business and Economics, Technische Universität Dresden, 01062 Dresden, Germany.

* Corresponding author. Email: oliver.knospe@tu-dresden.de

Abstract: This paper provides evidence on key attributes of lobbying towards the International Accounting Standards Board (IASB) based on 377 comment letters and 3,344 individual comments submitted in the course of the project “Post-employment benefits (including pensions)”. Univariate results indicate that accounting professions (constituents from EU countries) are more intensively engaged and more successful in lobbying through comment letters than prepares (constituents from the US). Multivariate results reveal that lobbying success is associated with the constituents’ lobbying positions in terms of agreement or disagreement with a proposed rule. In cases where the constituent disagrees with a proposal or where the IASB changes a rule in the final standard, information transfer in terms of comprehensiveness of individual comments is positively associated with lobbying success. This finding suggest that it is important to substantiate disagreement with proposed rules in comment letters in order to overcome the IASB’s priors. The results have implications for the recent debate on the heavy impact of accounting professions and the EU on the development of IASB standards, the legitimacy of the IASB, and future lobbying research.

Keywords: International Accounting Standards Board (IASB); International Financial Reporting Standards (IFRS); lobbying; standard-setting.

Data Availability: All data are publicly available from sources indicated in the paper.

Acknowledgements: The authors gratefully acknowledge valuable comments and suggestions of two anonymous reviewers, Sylvain Durocher, Robert K. Larson, Daniel Zéghal, workshop participants at the Technische Universität Dresden and HHL University Leipzig, and participants at the EAA Annual Congress 2014. The paper has also benefited from helpful insights provided by three actual constituents in the IASB’s due process investigated in this research that wish to stay anonymous.

This version: April 2016 for presentation at the TIJA Symposium 2016 (TIJA MS-1615)

16155/2/16

 

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1. Introduction

This paper investigates participation, content, and success as key attributes of lobbying

towards the International Accounting Standards Board (IASB) through comment letters

submitted in course of the project “Post-employment benefits (including pensions)” (IASB,

2008, 2019; IFRS Foundation, 2011b). Beyond participation the aim is to investigate whether

there are differences in the content and in the success of lobbying between interest groups and

constituents’ geographic origins, and whether the content of comment letters determines

lobbying success while controlling for other factors. The analyses address the role of

accounting professions and constituents from EU countries that are assumed to dominate the

IASB’s standard-setting process.

Accounting standard-setting is not merely a technical exercise but a political process and as

such it is subject to lobbying (Watts & Zimmerman, 1978; Königsgruber, 2010, 2014;

Kothari, Ramanna, & Skinner, 2010). Actions which interested parties that are affected by

accounting standards take to influence standard-setting in order to affect wealth transfers are

commonly referred to as lobbying and embrace an array of methods (Sutton, 1984; Georgiou,

2005; Orens, Jorissen, Lybaert, & Van der Tas, 2011). As a consequence, participation in the

standard-setting process can be seen as lobbying by interested parties. While standard-setters

seek input from interested parties in the standard-setting process, concerns on the

transparency of and on unbalanced influence on the standard-setting process threaten the

legitimacy of the standard-setters (Johnson & Solomons, 1984; Mattli & Büthe, 2005; Zeff,

2008). The IASB as the standard-setting body of the International Financial Reporting

Standards (IFRS) Foundation is subject to such concerns (Larson & Kenny, 2011; Richardson

& Eberlein, 2011; McGregor, 2012). Particularly, the legitimacy of the IASB depends on a

wide-spread participation in the standard-setting process across both, interest groups and

geographic origins (Durocher, Fortin, & Côté, 2007; Larson & Kenny, 2011; Jorissen,

Lybaert, Orens, & Van der Tas, 2013, 2014).

Recent criticism suggests a dominant impact of accounting professions and of the EU

constituents on the development of IFRS. First, while accounting professions hold expertise

that can be exploited by the IASB, accounting professions are heavily involved in the

committees or working groups, the standard-setting process, and the financing of the IFRS

Foundation (Perry & Nöelke, 2005; Larson & Kenny, 2011, Jorissen et al., 2013). Even a

 

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member of the European Parliament gives a warning about the IASB’s “close ties to the

accounting profession, chiefly the Big Four firms” (Kamall, 2014, 1). Second, the global

financial crisis “altered beliefs on who are the legitimate stakeholders of accounting

information” and induced a “repoliticalization of accounting standard-setting” (Bengtsson,

2011, 577). The EU has enhanced its efforts towards the international standard-setter to

secure “a well-functioning common financial reporting framework” (European Parliament,

2014, 1). These efforts include a program on providing funds and plans to change the

organizational structure of the European Financial Reporting Advisory Group (EFRAG) to

reinforce EU interest in the IASB’s work (Maystadt, 2013; European Parliament, 2014). In

turn, US interest in international accounting standard setting seems to decline (Larson &

Kenny, 2011; SEC, 2014).

The IASB develops standards based on an institutional due process that involves interested

parties and particularly invites them to submit comment letters in response to discussion

papers (DP) and exposure drafts (ED). Comment letters are assigned “a vital role in the

IASB’s formal deliberative process” (IFRS Foundation, 2012, par. 96). The extent to which

constituents from various interest groups and geographic origins contribute in the process

through comment letters crucially signals the IASB’s legitimacy (Suchman, 1995; Larson,

2007; Durocher & Fortin, 2011; Giner & Arce, 2012, 2014). As a major way to transfer

information, comment letters can be considered as a wide-spread and publicly observable

vehicle of lobbying towards the IASB (Chiapello & Medjad, 2009; Georgiou, 2010; Hansen,

2011; Orens et al., 2011). Given evidence by Georgiou (2004) that lobbying through comment

letters serves as a good proxy for overall lobbying, this paper refines lobbying to attributes of

comment letters submitted.

A large strand of empirical accounting research on lobbying a standard-setter relies on

comment letters and on Sutton’s (1984) framework. This framework explains lobbying

behavior by comparing the expected benefits of successful lobbying and the lobbying cost.

The body of research embraces three major strands of literature addressing constituents’

lobbying behavior in the private accounting standard-setting process. The first strand

addresses attributes of those participating in the due process through comment letters,

covering the question whether to lobby. The second focuses on attributes of content of

arguments raised in comment letters, covering the question what to lobby on and how. The

third strand addresses attributes of lobbying success, i.e. to what extent the constituents’

 

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lobbying positions are reflected in a final standard. Key limitations of existing evidence on

lobbying the IASB through comment letters relate to the lack of an integrated perspective in

two major regards. First, only few studies jointly address participation, content, and success

of lobbying behavior (Giner & Arce, 2012, 2014). Second, only few studies cover a broad

spectrum of an IASB’s due process, including a DP, an ED, and a final IFRS (Kwok, 1999;

Larson & Brown, 2001; Kwok & Sharp, 2005; Giner & Arce, 2012, 2014). As a consequence,

research taking an integrated perspective and addressing the association between

characteristics of constituents, the content of their comments, and lobbying success is

warranted.

This paper contributes by taking an integrated perspective on lobbying towards the IASB in

course of the project “Post-employment benefits (including pensions)” leading up to the

amended International Accounting Standard IAS 19 “Employee Benefits”. We adopt Sutton’s

(1984) framework and use content analysis of 377 comment letters submitted in course of the

project in order to assess patterns of constituents’ participation, content, and success of

lobbying towards the IASB. Responding to recent criticism, we particularly examine whether

there is evidence consistent with accounting professions and constituents from the EU

dominating the standard-setting process.

Adopting a single-case approach has several advantages compared to a multi-case approach

covering comment letters on various projects. Particularly, it avoids problems of collusion in

responses or shifting preferences and allows an in-depth analysis of comment letters (Walker

& Robinson, 1993; Laughlin, 2007; Giner & Arce, 2012, 2014). We choose the project “Post-

employment benefits (including pensions)” due to four key reasons. First, pensions are of

large economic and social interest (Hayashi, Olkkonen, Sikken, & Yermo, 2010; Pino &

Yermo, 2010; Klumpes, 2011) as reflected by the large number of comment letters we

observe. Second, pension accounting is a complex issue with heavy impact on financial

statements that has been controversially debated internationally (Barth, Beaver, & Landsman,

1992; Amen, 2007; Glaum, 2009). Beyond large participation, this suggests that constituents’

preferences differ across interest groups and geographic origins. Third, the project covers

various accounting issues such as concepts of recognition and measurement, disclosure, and

technical issues. This allows addressing attributes of lobbying on different accounting issues

in a single-case approach. Finally, we select a typical IASB due process, including a DP, an

ED, and a final standard.

 

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This research is closely related to four recent papers on lobbying towards the IASB. Jorissen

et al. (2013) and Larson & Herz (2013) provide a geographical analysis of constituents’

participation. However, none of them analyzes the content of comment letters or the lobbying

success. Drawing on five EDs, Hansen (2011) employs logit regressions to investigate

determinants of lobbying success. Unlike Hansen (2011), we focus on the information

conveyed by individual comments (instead of entire comment letters), control for accounting

professions and constituents from EU countries, and provide evidence on cases where a

change was made between the ED and the final standard. Adopting a single-case approach,

Giner & Arce (2012) address participation, content, and lobbying success. Yet, they only code

three questions and rely on univariate tests to address lobbying success. In contrast, we

address 25 questions divided in three categories of accounting issues and run various sets of

regression models. Our study, thus, contributes to existing evidence on lobbying towards the

IASB by taking an integrated perspective on participation, content, and success by covering

key stages of a typical due process and by enhancing prior research approaches.

Our results on constituents’ participation are consistent with Sutton (1984) across interest

groups and geographic origins but do not support his prediction of more lobbying in early

stages of the due process. Univariate results indicate that accounting professions (constituents

from EU countries) are more intensively engaged and more successful in lobbying through

comment letters than preparers (constituents from the US). Multivariate findings indicate that

lobbying success is associated with the constituents’ lobbying positions in terms of agreement

or disagreement with a proposed rule. In cases where a constituent disagrees with a proposal

or where the IASB makes a change between the ED and the final standard, information

transfer in terms of the comprehensiveness of comments is positively associated with

lobbying success. This finding suggests that it is important to substantiate disagreement with

proposed rules in comment letters in order to overcome the IASB’s priors. The results have

implications for the recent debate on heavy impact of accounting professions and the EU on

the development of IASB standards, the legitimacy of the IASB, and future lobbying research.

The remainder of this paper proceeds as follows. The next Section reviews the literature and

develops our research hypothesis. Section 3 explains the research design. Results are

presented and discussed in Section 4. The last Section concludes the paper.

 

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2. Literature review and hypothesis development

Lobbying towards the IASB can be analyzed from various theoretical perspectives (Ndubizu,

Choi, & Jain, 1993; Durocher et al., 2007; Orens et al., 2011). Positive accounting theory

(Watts & Zimmerman, 1978, 1990), agency theory (Bernheim & Whinston, 1986; Mattli &

Büthe, 2005), and rational choice theory (Downs, 1957; Olson, 1965), all suggest that

lobbying is motivated by self-interest and can be regarded as a function of lobbying cost and

the expected benefits from successful lobbying. Building on work of Downs (1957), Sutton

(1984) provides a theoretical framework in which lobbying occurs if the difference in the

utility a potential constituent assigns to two alternative outcomes of the standard-setting

process, adjusted by the probability that lobbying will be successful, exceed the lobbying

cost.1 Within his framework, Sutton (1984) derives a number of predictions on lobbying

behavior. Most of prior empirical research on lobbying domestic accounting standard-setters

(e.g., Ndubizu et al., 1993; Buckmaster, Saniga, & Tadesse, 1994; Stenka & Taylor, 2010;

Koh, 2011) and the international one (e.g., Larson, 1997; Giner & Arce, 2012; Jorissen,

Lybaert, Orens, & Van der Tas, 2012; Kosi & Reither, 2014) is based on this framework. We

adopt Sutton’s (1984) framework in regard to participation, content, and success as attributes

of lobbying towards the IASB.

2.1. Participation in the IASB’s due process

Sutton’s (1984) framework implies that participation in lobbying is concentrated among those

who bear heavy economic consequences and more particularly those who expect a net benefit

from participation. Since the expected gross benefits and the lobbying cost are likely to differ

between interest groups, interest groups will not be equally represented in the process of

lobbying. Consistent with logics of collective action (Olson, 1965; Lindahl, 1987), preparers

are more likely to participate than users. Given relative wealth and consistent with

considerations of legitimacy (Burlaud & Colasse, 2011; Richardson & Eberlein, 2011),

accounting professions – as well as regulators – can be assumed to have large incentives to

lobby the standard-setter (Haring, 1979; MacArthur, 1988a, 1988b; Deegan, Morris, &

Stokes, 1990; Meier, Alam, & Pearson, 1993; Schalow, 1995; Zeff, 2002; Königsgruber,

                                                            1 It should be noted that the framework largely neglects the broader social and economic context in which the

standard-setter and the standards exist (MacArthur, 1996, 1999; Jorissen, Lybaert, & Van de Poel, 2006; Orens et al., 2011). See Sutton (1984, 83-88) for a discussion of the characteristics of lobbying versus voting, which indicates that the framework can be adopted in the context of lobbying towards accounting standard-setters through comment letters.

 

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2010). These predictions are largely supported by the body of evidence on lobbying

accounting standard-setters, including the IASB (Larson, 2007; Giner & Arce, 2012; Jorissen

et al., 2012).

At the international level of accounting standard-setting by the IASB, Sutton’s (1984)

framework suggests that relative wealth in economically developed countries and relatively

heavy consequences of new or amended standards in countries that follow IFRS are

associated with higher participation in the IASB’s due process. Evidence on participation is

largely consistent with this assessment (Larson, 2007; Larson & Herz, 2013). Particularly,

there is a large number of constituents from EU countries and from the US (Jorissen et al.,

2013; Larson & Herz, 2013).

2.2. Content of lobbying

Sutton’s (1984) framework does not end at the stage of participation but suggests differences

in the content lobbying between groups of constituents. It predicts that the level of

completeness of comments, the level of agreement with proposed rules, and the categories of

accounting issues constituents focus on, will differ across interest groups and geographic

origins given different assessments of expected gross benefits and cost in determining their

lobbying behavior. Specifically, Sutton (1984, 87) argues: “[S]tandards which alter the

measurement of earnings or the valuation of assets and liabilities typically arouse much

greater interest among producers than consumers. By contrast, consumers supposedly pay

more attention to standards which alter the level of financial disclosure, favoring those which

provide additional information.”2 There is evidence on lobbying domestic standard-setters in

support of these predictions (Rahman, Lay Wee, & Tower, 1994; Beaver, 1997; Saemann,

1999; Georgiou, 2004).

Accounting professions are affected by new and amended accounting standards directly and

indirectly through their clients. They are heavily involved in the IASB’s standard-setting

process (Jorissen et al., 2006; Larson, 2007; Georgiou, 2010). Given relative wealth and

professional expertise, accounting professions are likely to lobby on all categories of

accounting issues. As a consequence, we expect accounting professions to provide more

                                                            2 According to Sutton (1984, 88), this assessment holds if there is no charge levied on users for the supply of

such information.

 

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complete sets of comments provided in comment letters than preparers and users, respectively

(Tutticci, Dunstan, & Holmes, 1994). Thus, our first hypothesis states:

H1a: Accounting professions provide more complete sets of comments on proposed rules than

preparers and users, respectively.

Sutton’s (1984) prediction that lobbying is concentrated among those who bear heavy

economic consequences can be put forward to the international level. Constituents from

countries where IFRS have been adopted are likely to bear heavier economic consequences

than constituents from countries where IFRS have not been adopted (Hansen, 2011; Jorissen

et al., 2013; Königsgruber, 2014).

Given the adoption of IFRS in EU countries, the IASB’s accounting standards and changes

therein are likely to have substantial consequences for constituents from EU countries

(European Parliament, 2002; Giner & Arce, 2012). In contrast, the SEC requires US private

issuers to prepare financial statements according to US GAAP while accepting financial

statements prepared in accordance with IFRS from foreign private issuers (SEC, 2008).

Despite efforts on convergence between IFRS and US GAAP, constituents from the US are

likely to be less affected by new or amended standards issued by the IASB than constituents

from EU countries (Jorissen et al., 2013; Königsgruber, 2014). This assessment is consistent

with the repoliticalization of accounting standard-setting in course of the financial crisis

(Chiapello & Medjad, 2009; Bengtsson, 2011). Against this background, we expect that

constituents from EU countries provide more complete sets of comments provided in

comment letters than constituents from the US. Thus, our next hypothesis states:

H1b: Constituents from EU countries provide more complete sets of comments on proposed

rules than constituents from the US.

Prior evidence indicates that accounting professions are sensitive to preferences of their

clients (Haring, 1979; Chatham, Larson, & Vietze, 2010; Giner & Arce, 2012) but pursue

their own interests (MacArthur, 1988b; Meier et al., 1993; Jorissen et al., 2006). In particular,

auditors may prefer “complex arrangements, because they will increase audit fees” (Jorissen

et al., 2006, 30) suggesting higher levels of agreement with complex accounting rules. This

assessment is consistent with Sutton (1984) and with Chatham et al. (2010) who document a

 

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higher level of agreement with complex accounting rules by accounting professions than by

both preparers and users, respectively.

Georgiou (2010) and Perry and Nöelke (2005) suggest that accounting professions use a

number of formal and informal lobbying methods to impact on the accounting rule proposed

in the standard-setter’s due process document and then agree to the proposals by comment

letters. Such behavior should be less prevalent among preparers and unlikely among users

who generally have less impact on the standard-setter’s initial proposals (Sutton, 1984;

Georgiou, 2010). In particular, such behavior by accounting professions is in line with the

important role of the accounting professions’ practical expertise in developing accounting

standards and the IASB striving for legitimacy (Walker & Robinson, 1993; Suchman, 1995;

Richardson & Eberlein, 2011). Larson (2007, 216) states “support from professional

accountancy bodies provides greater legitimacy for IFRS”. Thus, we state the following

hypothesis:

H2a: The level of agreement with proposed rules of accounting professions is higher than the

level of agreement of preparers and users, respectively.

Geographic origins and jurisdictions are not equally represented in the institutions of the IFRS

Foundation (Perry & Nöelke, 2005; Burlaud & Colasse, 2011; Danjou & Walton, 2012). A

relatively large number of representatives are from EU countries and from the US. Georgiou

(2010) and Perry & Nöelke (2005) suggest that the EU has a high perceived influence on the

IASB, especially on the IASB’s committees. Through representatives, EU institutions such as

the EFRAG, and other informal lobbying methods, constituents from EU countries are thus

particularly likely to impact on the IASB’s initial accounting rule proposed in a due process

document. As for accounting professions and consistent with the repoliticalization of

accounting standard-setting (Bengtsson, 2011), it is argued here that constituents from EU

countries are likely to impact the IASB’s proposals and then agree to the proposals by

comment letters. As a consequence, there should be a high level of agreement with proposed

rules in the lobbying positions expressed in comment letters by constituents from EU

countries.

US constituents may engage in a similar behavior like constituents from EU countries. The

different institutional framework in the US, including the reliance on financial statements

 

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prepared in accordance with US GAAP instead of IFRS, however, suggests that lobbying

positions differ between constituents from EU countries and the US. US constituents can be

expected to oppose proposals that are not consistent with the accounting treatment under US

GAAP. Kenny & Larson (1993) and Chatham et al. (2010) demonstrate that US constituents

differ from constituents from EU countries in terms of agreement with proposed IFRS. Thus,

we state the following hypothesis:

H2b: The level of agreement with proposed rules of constituents from EU countries is higher

than the level of agreement of constituents from the US.

2.3. Lobbying success

The expected success of lobbying is a key component in Sutton’s (1984) framework to

explain lobbying behavior from an ex ante perspective. From an ex post perspective, key

questions are whether lobbying is successful and whether lobbying success is positively

related to attributes representing ex ante incentives to engage in lobbying. If costly lobbying

doesn’t pay off, incentives to lobby will erode. In similar vein, Sutton (1984, 90) posits:

“Whether or not a lobbyist is successful in the short term, he will clearly be interested in ways

of reducing the risk of failure in the long term.”

Political literature suggests that lobbying success differs between interest groups depending

on their social status and ability to form coalitions (Mahoney, 2007; Ethridge & Handelmann,

2010; Klüver, 2011). Largely based on multiple principle-agent models, another strand of

literature argues that the standard-setter acts as an agent in its own interest given indecision-

dependent rewards by interest groups as principals (Fogarty, 1994; Königsgruber, 2010).

Mattli & Büthe (2005) posit that lobbying success depends on the constituents’ contribution

to the viability of the standard-setter particularly by providing financial resources required to

operate.

The high level of involvement of accounting professions in IASB’s standard-setting process

(Jorissen et al., 2006; Larson, 2007; Georgiou, 2010), financing structure (Larson & Kenny,

2011), and committees (Perry & Nöelke, 2005) gives rise to concerns on the IASB’s

legitimacy (Richardson & Eberlein, 2011). In particular, a member of the European

parliament gives a warning on the IASB’s “close ties to the accounting profession” (Kamall,

2014, 1), especially the large public accounting firms.

 

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Early findings from the US indicate that the standard-setter’s decisions are influenced by

accounting professions (Haring, 1979). Georgiou (2010) finds a high perceived influence of

accounting professions on standard-setting. Univariate results of Giner & Arce (2012) suggest

no dominant impact of a specific interest group on the IASB’s decisions. Multivariate results

by Hansen (2011) indicate a positive association between lobbying success and the amount of

financial contribution provided, with large public accounting firms accounting firms

providing the highest amount of donations. In technical terms, the idea that accounting

professions in particular impact on the accounting rule proposed in the standard-setter’s due

process document and then agree to the proposals by comment letters suggests that

accounting professions are likely to be successful in lobbying through comment letters.

Against this background, we state the following hypothesis:

H3a: The level of lobbying success of accounting professions is higher than the lobbying

success of preparers and users, respectively.

Adopting the above arguments to the international level suggest that lobbying success differs

between constituents from different geographic origins. In course of the repoliticalization of

accounting standard-setting following the financial crisis, the EU has been strengthening its

influence on the IASB (Chiapello & Medjad, 2009; Bengtsson, 2011). In contrast, the US

interest in international accounting standard-setting seems to decline (Larson & Kenny, 2011;

SEC, 2014). A recent strategy paper of the SEC (2014) for the years 2014-2020 does not even

refer to convergence of IFRS and US GAAP. The FASB (2014) removed the Phase II of the

convergence project “Postretirement Benefit Obligations, including Pensions” from its

agenda. These developments suggest that constituents from EU countries are likely to

dominate those from the US in terms of lobbying success.

Recent empirical evidence supports this assessment. Georgiou (2010) documents large

perceived influence of regulators domiciled in EU countries and of the EFRAG – and to a

lesser extent of US bodies – on the IASB’s decisions. Hansen (2011) finds a positive

association between lobbying success and a country’s level of reliance on IFRS, which is high

in EU countries while low in the US. In technical terms, the idea that EU constituents in

particular impact on the accounting rules proposed in the IASB’s due process document and

then agree to the proposals by comment letters suggests that EU constituents are likely to be

successful in lobbying through comment letters. Thus, we state the following hypothesis:

 

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H3b: The level of lobbying success of constituents from EU countries is higher than the

lobbying success of constituents from the US.

Information-based strands of literature argue that lobbying success increases with a

constituents’ ability to transfer information to the standard-setter (Kwok & Sharp, 2005;

Hansen, 2011). Comment letters are a common vehicle and a valid indicator for information

transfer (Georgiou, 2004, 2010). Lobbying success by comment letters should, thus, be a

function of attributes of those who participate, the comprehensiveness of the individual

comments they provide, and their level of agreement with rules proposed by the standard-

setter.

Various strands of theory suggest that lobbying success differs between interest groups

(Mahoney, 2007; Königsgruber, 2010). Mattli & Büthe (2005) argue that lobbying success is

associated with the ability of constituents to impact the financial viability of the standard-

setter by providing financial contributions required to operate. Early US studies support the

idea that lobbying success is associated with the attributes of information conveyed in

comment letters in terms of the lobbying position as expressed by agreement or disagreement

and the comprehensiveness of comments (Haring, 1979; MacArthur, 1988b; McEnroe, 1993;

Buckmaster et al., 1994). In technical terms, supporting proposed rules may enhance lobbying

success if the standard-setter maintains its priors.

Determinants of successful lobbying towards the IASB are still underexplored. Focusing the

project “Share-based Payment”, Giner and Arce (2012) show that the quality of arguments

influences the IASB’s decision to change its position, while no interest group has dominant

impact. Hansen (2011) finds that lobbying success is a function of the information transfer by

comment letters and of the ability to impact the viability of the IASB. Particularly, his

measures of information transfer (of an entire comment letter) as well as agreement with

proposed rules (addressed in individual questions) are positively associated with lobbying

success.

Against this background, lobbying success by comment letters should be associated with the

information transfer, i.e. the content of comment letters submitted in terms of the agreement

or disagreement with proposed rules and in terms of the comprehensiveness of the comments

provided (e.g., the length of individual comment). Thus, our final hypotheses state:

 

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H4a: Lobbying success is positively associated with the information transfer in terms of the

comprehensiveness of constituents’ comments.

H4b: Lobbying success is associated with the information transfer in terms of constituents’

lobbying position as expressed by agreement or disagreement.

3. Research design

We focus our study on comment letters submitted to the IASB in course of the project “Post-

employment benefits (including pensions)”. The objectives of this major project were to

address conceptual criticism on IAS 19 and to improve the quality and transparency of

financial statements (IASB, 2011; IFRS Foundation, 2011b). The project was conducted in

two phases. The first phase aimed at short-term amendments to IAS 19. The second phase

aims at a fundamental review of concepts in the course of convergence with US GAAP. We

focus on the completed first phase that embraces the following due process documents.

(1) In March 2008, the IASB published a DP on short-term modifications as well as

preliminary views on the deferred recognition of gains and losses arising from defined

benefit plans, the presentation of the changes in net defined benefit liabilities or assets,

and the accounting for contribution-based promises (IASB, 2008). Comments received by

the IASB induced a change in the project’s scope.

(2) In April 2010, the IASB published an ED which significantly differs from the DP. The

ED proposes the separation and immediate recognition of components of defined benefit

cost. Entities should present service cost in profit or loss, interest cost as a part of finance

cost, and the remeasurement component of the net defined benefit liability in other

comprehensive income. Moreover, the ED proposed enhanced disclosure requirements

about the characteristics of an entity’s defined benefit plans and the related amounts

recognized in the financial statements, risk arising from defined benefit plans, including

sensitivity analyses of changes in demographic risk, and participation in multiemployer

plans (IASB, 2010).

 

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(3) In June 2011, the IASB published the amended IAS 19 “Employee Benefits” that has

been effective since 2013. Compared to the ED, the final standard does not require

entities to include interest cost in finance cost. The IASB removed a number of proposed

disclosure requirements related to information on the process used to determine

demographic actuarial assumptions; the present value of defined benefit obligation,

estimated without the effect of projected growth in salaries; and factors that could cause

contributions to differ from service cost. Furthermore, IFRIC 14 was not included in the

amended IAS 19 in order to avoid unintended consequences (IAS 19.BC272).

By choosing the project “Post-employment benefits (including pensions)” for this research,

we cover the spectrum of the above stages of the IASB’s due process, a complex and material

accounting topic critically debated by interest groups around the world, and three categories

of accounting issues covering standardization, disclosure, and technical issues.

3.1. Sample and key variables derived from content analysis

We collect 377 comment letters submitted in the course of the project and published on the

IASB’s website. There are 150 comment letters on the DP and 227 on the ED. We employ

content analysis of comment letters to collect the key variables for our study. All comment

letters are classified according to the constituents’ interest group affiliation and their home

country in a way consistent with Jorissen et al. (2013).3 Appendix A provides a detailed

overview of constituents per interest group and per home country.

Consistent with prior research (Francis, 1987; Tandy & Wilburn, 1996; Gilfedder & Ó

hÓgartaigh, 1998; Kwok & Sharpe, 2005; Larson, 2007) and assertions by the IFRS

Foundation (2010a, 2010b), we use the following types of interest groups: preparers of

financial statements (including financial service businesses, business associations,

cooperatives, and actuaries); users of financial statements (including analyst organizations,

financial associations, and other user associations); accounting professions (including

accounting professional bodies, public accounting firms, and other accounting groups);

regulators (such as accounting standard-setters, stock exchange regulators, and other

                                                            3 Comment letters of multiple authors are excluded if their interest group affiliation or their geographic

origin is different. In the case of subsidiaries, we use the location of the comment letter and do not identify the parent organization. Big-4 accounting firms and international bodies are considered as international constituents.

 

14  

government entities); and individuals (including academics, practitioners, and other

individuals).4

To address lobbying beyond participation, we focus on the comment letters on the ED. Unlike

the DP, the ED explicitly proposes rules for accounting for employee benefits and mainly

poses closed questions. These features allow for coding comments and linking comments to

the amended IAS 19 on a per-question level. We categorize comments according to the type

of accounting issue they focus on. This is done by reference to the questions posed in the ED.

The ED poses 17 main questions, which are partly divided into sub-questions. In total, there

are 32 questions. Seven questions are excluded from our analyses since they are rather open-

ended or do not allow for coding in terms of agreement or disagreement with proposed rules.5

Consistent with Buckmaster et al. (1994), we classify the comments on the remaining 25

questions into three categories of accounting issues: standardization of key accounting

methods focusing on methodical issues such as recognition, measurement and presentation

(Questions 1 to 7 posed in the ED; 11 questions included in the analyses), disclosure issues

focusing on disclosure requirements (Questions 8 to 9 posed in the ED; six questions

included); and technical issues concerning definitions, scope, transition, minor accounting

issues and amendments to other standards (Questions 13 to 17 posed in the ED; eight

questions included).6

For each question i–constituent j pair, we employ content analysis along three additional

dimensions. First, to assess whether a constituents’ comment letter replies to an individual

question posed in the ED (CMPL_1ij), we code 1 if a constituent replies to an individual

question, and 0 otherwise. Second, to obtain a measure of the comprehensiveness of per-

question reply (CMPR_1ij), we count the number of words per reply on each individual

question (Kosi & Reither, 2014). We use words rather than lines of comments to mitigate

potential bias by different formats of comment letters. We exclude any introductory or

                                                            4 For example, users include the Corporate Reporting Users‘ Forum and the Association for Financial

Professionals; accounting professions include the Institut der Wirtschaftsprüfer in Deutschland the Hong Kong Instiitute of Certified Public Accountants; regulators include the UK Accounting Standards Board and the Australian Accounting Standards Board.

5 We exclude Questions 10 to 12, 14, 16(a), 16(b) and 17 from the analyses since they don’t allow for consistent coding in terms of agreement or disagreement of constituents. For instance, Questions 12 and 17 state “Do you have any other comments…?”

6 The classification consistently follows the structure of the ED and is agreed upon by three actual constituents to the ED we discussed with.

 

15  

concluding parts of comment letters as well as repetitions of the questions posed the ED.7

Third, to assess the constituents’ lobbying position per question posed (AGRE_1ij), we code 1

if the reply agrees with the IASB’s proposal, and 0 if it indicates disagreement. In order to

assess lobbying success per individual question and consistent with Hansen (2011), we further

determine whether the final rule in the amended standard IAS 19 reflects the constituents’

lobbying position expressed in the reply (SUCC_1ij). The dummy variable on lobbying

success takes the value 1 if the constituents’ lobbying position is reflected in the final

standard, and 0 otherwise.

By aggregating the per-question codings, we calculate variables per constituent that reflect the

level of completeness, the level of agreement and the lobbying success of replies in an entire

comment letter or on each accounting issue, respectively. To capture the level of

completeness of comments, CMPL_2j represents the number of questions replied to divided

by the number of questions posed in the ED. As an average measure of the level of

agreement, AGRE_2j adds up the individual codings on AGRE_1ij and divides this sum by the

number of questions a constituent replied to. As an average measure of lobbying success,

SUCC_2j adds up the individual codings on SUCC_1ij and divides this sum by the number of

question replied to.8

Although our coding dimensions and categories are not complex, manual coding of comment

letters is inevitably subjective to some extent (Hill, Shelton, & Stevens, 2002). We

encountered specific problems in cases where a comment letter does not follow the structure

of questions posed in the ED. To ensure data reliability, the entire coding was conducted

independently by one of the authors and an experienced student coder. Any disagreements

were examined and reconciled. In this course, we had to exclude 38 comment letters from the

analyses related to content and lobbying success since the comments cannot not be

consistently linked to the questions posed and consistently coded across all variables. Thus,

the final sample of our main analyses includes 189 comment letters.

                                                            7 While there may be more sophisticated ways to measure comprehensiveness, e.g. by reference to attributes

of arguments raised (Giner & Acre, 2012; Hansen, 2011), such measures are difficult to collect on the basis of individual replies per question.

8 The correlations between CMPL_2j, AGRE_2j and SUCC_2j are all positive and significant. For the comment letters submitted in response to the ED, the Pearson correlations between the three variables are equal to 0.212 (between CMPL_2j and SUCC_2j), 0.512 (between CMPL_2j and AGRE_2j) and 0.625 (between AGRE_2j and SUCC_2j). The correlations indicate that the three variables our hypotheses H1a to H3b focus on capture different concepts. 

 

16  

3.2. Test procedures and regression model

The first sets of hypotheses (H1a–H3b) refer to the content of lobbying (CMPL_2j and

AGRE_2j) and lobbying success (SUCC_2j). Consistent with Tutticci et al. (1994) and Giner

& Arce (2012), we employ Wilcoxon and Mann-Whitney tests to compare the variables of

interest across interest groups, constituents’ geographic origins, and categories of accounting

issues.

Lobbying is successful to the extent that a lobbying position expressed is reflected in the final

standard (Haring, 1979; Buckmaster et al., 1994). In order to test H4a and H4b on the

determinants of lobbying success, we estimate the following logit regression model that takes

the perspective of lobbying success per question replied to. Table I provides detailed variable

definitions.

0 1 2

3 4 5 6 7 8 9

10 11

_1 _1 _1ij ij ij

j j j j j j j

j j ijm

SUCC CMPR AGRE

IFRS CNTR LAW EU US PREP USER

REGU INDV QuestionDummy

(1)

[INSERT TABLE 1]

The model regresses lobbying success on two research variables and a set of control variables.

The first research variable is the comprehensiveness of an individual reply (CMPR_1ij). H4a

predicts a positive association between this variable and lobbying success, suggesting a

positive coefficient β1. The argument is that more comprehensive replies reflect higher

lobbying cost and larger information transfer to the standard-setter, which increases the

likelihood to impact upon the final standard (Hansen, 2011). In contrast to Hansen (2011),

who employs a factor representing the information transfer by the entire comment letter, our

research variable is question-specific and allows addressing the association between the

comprehensiveness and lobbying success at the level of replies to individual questions posed

in the ED.9

                                                            9 In our robustness tests we include a factor representing the information transfer by the entire comment

letter in the regression and find that CMPR_1ij still has incremental explanatory power for lobbying success.

 

17  

The second research variable reflects a constituent’s agreement as opposed to disagreement

with a proposed rule (AGRE_1ij). The direction of the association between this variable and

lobbying success depends on the lobbying position taken. Agreeing with a proposal in the ED

which reflects the IASB’s initially favored position is more likely to be “successful” than

opposing a proposal and overcoming priors (Haring, 1979; Buckmaster et al., 1994),

suggesting a positive coefficient β2. Since using the full sample does not necessarily provide

the best specification to test H4b, we particularly focus on two subsamples. First and

consistent with Hansen (2011), we limit the sample to the cases where the constituent opposes

the proposal expressed in the ED (AGRE_1ij=0). This subset focuses on determinants of

lobbying success when constituents desire a change compared to the proposal. Second, we

limit the sample to cases where a change was made between the ED and the final standard

(CHANGEij=1). This subset focuses on determinants of lobbying success when a change

compared to the proposal was actually made.

The variable IFRSj represents the level of reliance on IFRS in the constituents’ home country.

Data collected from the IASPlus website yields three categories where IFRS are not permitted

(IFRSj=1), are permitted (IFRSj=2), or are required for some or all financial statements

(IFRSj=3).10 The idea is that economic consequences of new or amended IFRS rules and, thus,

incentives to engage in lobbying are likely to increase in the level of reliance on IFRS in the

constituents’ home country. Consistent with Sutton’s (1984) framework and prior empirical

findings (Hansen, 2011; Jorissen et al., 2013), we expect a positive coefficient on IFRSj.

In order to control for the impact on the financial viability of the IASB, we include the

amount of financial contributions (CNTRj) by constituents’ home countries (or by individual

international accounting firms) provided to the IFRS Foundation. Data is obtained from the

annual report 2010 of the IFRS Foundation (2011a). Consistent with Hansen (2011), we

expect a positive coefficient on CNTRj.

To control for the impact of a country’s level of enforcement on constituents’ lobbying

success, we include the variable rule of law (LAWj) as of 2010 based on World Bank (2014)

data. Enforcement of the IASB’s accounting standards strengthens legitimacy of the IASB

                                                            10 Since some international constituents (including Big-4 accounting firms) cannot be reasonably classified to

a jurisdiction along these lines, our regression analysis on lobbying success has to drop these observations. European institutions, such as the EFRAG, are coded IFRSj=3; so are international accounting firms. Results are robust to the exclusion of European institutions and international accounting firms.

 

18  

and increases constituents’ incentives to influence the standard-setting (Ball, Robin, &

Shuang, 2003; Hansen, 2011). Consistent with findings of Jorissen et al. (2013), we expect a

positive coefficient on LAWj.

To control for particular lobbying success of constituents from EU countries and from the US,

we include two dummy variables. EUj (USj) takes the value 1 if a constituent is domiciled in

EU countries (in the US), and 0 otherwise. Given the repoliticalization of international

standard-setting (Bengtsson, 2011), growing efforts of EU countries to influence the IASB’s

due process (SEC, 2008; Chiapello & Medjad, 2009), and declining US interest (Larson &

Kenny, 2011; SEC, 2014), we expect a positive coefficient on EUj and a negative coefficient

on USj.

Consistent with Sutton’s (1984) framework, we control for differences in lobbying success

between interest groups by including a sequence of dummy variables. In order to represent the

specific role of accounting professions in the IASB’s due process, we use accounting

professions as the base case. Consistent with criticism on heavy involvement of accounting

professions in the IASB’s due process and prior literature (Sutton, 1984; Perry & Nöelke,

2005; Georgiou, 2010), we expect a positive association between accounting professions and

the lobbying success. Thus, we expect negative coefficients on the dummy variables on the

remaining interest groups. Finally, we include a sequence of dummy variables for the

questions posed in the ED to control for question-specific effects (Hansen, 2011).

4. Results and discussion

4.1. Participation

Table 2 presents the results on the participation in the due process through comment letters.

There are 150 comment letters on the DP and 227 on the ED. 97 Panel A reports the results by

interest groups. We find a consistent pattern where preparers are the most active interest

group (DP: 55%; ED: 60%) followed by accounting professions (DP: 17%; ED: 15%) and

regulators (DP: 15%; ED: 14%).11 In turn, users only constitute a low proportion of

                                                            11 Consistent with prior finding (e.g., Giner & Arce, 2012), all Big-4 accounting firms submitted comment

letters in response to the DP and the ED.  

 

19  

constituents in each phase (DP: 7%; ED: 7%). 97 constituents sent comment letters on both

the DP and the ED. Across the board, χ2 tests indicate that interest groups are not equally

represented (p<0.001). Particularly, preparers are more represented than users although their

population is smaller (p<0.001). These findings are consistent with Sutton’s (1984)

predictions and most of prior evidence on the IASB (Jorissen et al., 2012; Giner & Arce,

2012).

Results on the participation by constituents’ geographic origins are shown in Panel B of Table

2. Across the board, European constituents participate most frequently (DP: 59%; ED: 46%),

followed by North American constituents (DP: 16%; ED: 24%). χ2 tests indicate that the

continents are not equally represented (p<0.001). Particularly, constituents from EU countries

(DP: 49%; ED: 40%) are more represented than constituents from the US (DP: 8%; ED: 18%;

p<0.001). These findings are consistent with criticism of EU overrepresentation in the IASB’s

standard-setting process (Véron, 2007; Chiapello & Medjad, 2009; Richardson & Eberlein,

2011; Maystadt, 2013).

[INSERT TABLE 2]

Concerning the timing of lobbying, there are more constituents on the ED than on the DP in

each interest group and across all major continents of origin. In absolute numbers, we find an

increase in participation from the DP to the ED. χ2 tests indicate that the increase in

participation is significant for total constituents (p<0.001), for preparers as a major interest

group (p<0.001), and for constituents from North America (p<0.001), the US (p<0.001) and

Asia–Oceania (p=0.015). The increase in participation is insignificant for constituents from

EU countries where we observe 44 constituents participating in both phases. While prior

evidence on the IASB is limited and indecisive (Georgiou, 2010; Jorissen et al., 2012; Giner

& Arce, 2012, 2014), our results support views opposing Sutton’s (1984) prediction that

lobbying is more likely to occur in early phases of the due process as opposed to later ones.

One obvious explanation for this result could be that some constituents – preparers in

particular – do not have sufficient resources to address the large number of due process

documents issued by the IASB and have to focus (Dobler & Knospe, 2015). Given the

 

20  

flexibility of the IASB’s agenda, it would come naturally to omit to comment on a DP rather

than an ED in most circumstances.12

Our results on participation contradict Sutton’s (1984) prediction on the timing of lobbying,

but are indicate differences between interest groups and geographic origins that are consistent

with Sutton (1984). Our findings seem to support criticism on heavy involvement of both –

accounting professions and constituents from EU countries – in the IASB’s standard-setting

process.

4.2. Content

To address H1a–H2b, we compare the level of completeness (CMPL_2j) of comment letters

as well as the level of agreement (AGRE_2j) with proposals on interest groups and categories

of accounting issues.

Table 3 presents the results on the level of completeness of comment letters (CMPL_2j). Panel

A provides descriptive statistics and paired Wilcoxon tests on categories of accounting issues

addressed by interest groups and geographic origins. On average, constituents answer 79

percent of the questions posed in the ED. Accounting professions (91%) and regulators (85%)

provide the most complete set of replies. Individuals (68%) and users (70%) provide the least

complete ones. Comment letters of international (94%) and African (98%) constituents show

the highest levels of completeness, those of constituents from North America (71%) and

AsiaOceania (70%) show particularly low levels of completeness.

Standardization issues (86%) are most frequently addressed, followed by disclosure issues

(82%) and technical issues (68%). Wilcoxon tests reported in the last three columns of Panel

A in Table 3 indicate that the differences in the level of completeness between the categories

of accounting issues addressed are significant for the total sample. This finding does not hold

for individual interest groups and constituents’ geographic origins. Particularly, we do not

find significant differences in the level of completeness of replies on standardization and on

disclosure issues between preparers and users. Accounting professions is the only interest

group that does not emphasize disclosure issues over technical issues in terms of the level of

                                                            12 Such behavior seems likely in our setting. In 2008, the year in which the DP on the project was published,

the IASB issued five DPs and eleven EDs. In 2010, when the ED on the project was published, one DP and 13 EDs were issued. Another explanation could relate to differences in accounting issues addressed by the DP and ED such as the inclusion of enhanced disclosure requirements in the ED.

 

21  

completeness. This finding seems consistent with the accounting professions’ heavy

involvement and expertise in technical details as reflected in their professional work.

[INSERT TABLE 3]

Panel B of Table 3 reports the results of pairwise Mann-Whitney tests between interest groups

and constituents’ geographic origins in total and per accounting issue. First, there is only one

pair of interest groups that does not differ in terms of level of completeness: preparers vs.

users. Second, all interest groups seem to put similar weight on lobbying on disclosure issues.

This finding is inconsistent with Sutton’s (1984) prediction. Third, accounting professions

and, to a lesser extent, regulators provide more complete replies than preparers or users. This

finding coincides with evidence by Giner and Arce (2012), Sutton’s (1984) argument of

relative wealth and prior literature assuming relative wealth of those interest groups. It further

suggests that accounting professions use comment letter to raise their legitimacy and to

document their expertise. Except for disclosure issues, our results support H1a.

Across the board, results reported in Panel B of Table 3 indicate significant differences in the

level of completeness between European and North American constituents. More particularly,

constituents from EU countries provide more complete sets of comments than constituents

from the US. This finding holds for the all categories of accounting issues. Our results, thus,

support H1b. This finding suggests that constituents from EU countries use comment letters to

lobby on a large number of accounting issues while constituents from the US tend to focus on

selected issues.

[INSERT TABLE 4]

Table 4 presents the results on the level of agreement with proposed rules (AGRE_2j). As

shown in Panel A, the overall level of agreement is equal to 61 percent. This result is in line

with Hansen (2011) who documents a rate of 63 percent but higher than the level of 52

percent reported by Giner and Arce (2012). The level of agreement ranges from 73 percent for

accounting professions and regulators to only 48 percent for individuals. We find an

intermediate and similar level of agreement for preparers and users (56% and 60%). The

analysis of constituents’ geographic origins reveals that African (78%) and South American

(85%) constituents have the highest level of agreement with proposed rules and constituents

 

22  

from Asia-Oceania (51%) and North America (57%) the lowest. The overall level of

agreement is 63 percent among constituents from EU countries and 53 percent for

constituents from the US.

Across the board, we find a consistent pattern where the level of agreement is the largest on

standardization issues (71%) followed by technical issues (68%) and surprisingly low on

disclosure issues (38%). Wilcoxon tests indicate a significantly higher level of agreement on

standardization issues than on disclosure issues. Apart from users and individuals, the level of

agreement is higher for technical than for disclosure issues. The findings indicate that

constituents tend to oppose the disclosure issues proposed in the ED.

Panel B of Table 4 presents results of Mann-Whitney tests between interest groups and

constituents’ geographic origins. There are four key findings. First, there is no significant

difference in terms of the level of agreement between preparers and users. Second and

consistent with considerations of legitimacy, there is no significant difference in the level of

agreement between accounting professions and regulators. Third, accounting professions are

more in support of proposed rules than preparers and users, respectively. This finding

supports our hypothesis H2a. Fourth, there are almost no significant differences in the level of

agreement between the constituents’ geographic origins. Particularly, our results do not

indicate significant differences in the level of agreement between constituents from EU

countries and from the US. This finding leads us to reject H2b. In sum, our results suggest

that the level of agreement with proposed rules expressed in comment letters is more related

to the constituents’ interest group affiliation than to their geographic origin.

4.3. Success

Table 5, Panel A, presents descriptive and univariate results on constituents’ level of lobbying

success (SUCC_2j) per interest group and per geographic origin. On average, the level of

lobbying success is 0.591 indicating that about 59 percent of lobbying positions expressed in

terms of agreement or disagreement in comment letters are reflected in the final standard. The

level of lobbying success ranges from 55 percent (individuals) and 65 percent (accounting

professions) across interest groups and from 53 percent (South America) and 62 percent

(Europe, Africa) across geographic origins. Except for technical issues, accounting

professions are the most successful interest group (65%). We note that the level of lobbing

 

23  

success is particularly high for constituents from EU countries (63%) and particularly low for

constituents from the US (49%). The level of lobbying success is highest on the

standardization issues (65%), followed by disclosure issues (60%), and technical issues

(54%). Wilcoxon tests, reported in the last three columns, suggest that lobbying success

differs between the categories of accounting issues. Comments on standardization issues are

the most successful followed by disclosure and technical issues. This pattern holds for interest

groups except for individuals and for all continents.

[INSERT TABLE 5]

Mann-Whitney tests reported in Panel B of Table 5 indicate just two significant pairwise

differences in the level of lobbying success between interest groups. Accounting professions

seem to dominate preparers in terms of the level of lobbying success in total (p=0.014) and on

standardization issues (p=0.016). These findings are consistent with H3a. However, we do not

find significant differences between accounting professions and users. This finding is

inconsistent with our hypothesis H3a and leads us to reject the hypothesis. Still, we provide

some evidence suggesting rather high lobbying success of accounting professions.

Results reported in Table 5, Panel B, indicate that the level of lobbying success differs across

constituents’ geographic origins. Particularly, we find a significantly higher level of lobbying

success of constituents from EU countries as compared to constituents from the US in total

and on standardization and disclosure issues. These univariate findings support our hypothesis

H3b and are in line with recent criticism of heavy impact of constituents from EU countries

on the IASB’s due process (Tweedie, 2004, 2010; Véron, 2007; Richardson & Eberlein,

2011).

[INSERT TABLE 6]

Table 6 reports descriptive statistics on and correlations between the variables used in our

regression model for the total set of 3,344 observations. We note that 61.7 percent of

individual replies are successful. The correlations between lobbying success and

comprehensiveness are negative, while the correlations between lobbying success and

agreement are positive and significant at 1 percent. The negative and significant correlations

between comprehensiveness and agreement indicate that replies opposing a proposal are

 

24  

longer than replies agreeing with a proposal. On the level of individual replies, these finding

suggest that SUCC_1ij, CMPR_1ij, and AGRE_1ij capture different concepts.

Table 7 presents our multivariate results of logit regressions. Across all specifications, VIFs

are below 6.039 and condition indices are below 27.129 suggesting that multicollinearity is

not a severe problem. Nagelkerkes R² ranges from 23 percent to 91 percent, indicating a

sound model fit. We report in Panel A of Table 7 the regression results for the total set of

observations and for the categories of accounting issues. For the total set of observations, we

find a negative and significant association between the comprehensiveness of comments

(CMPR_1ij) and lobbying success (SUCC_1ij). The percentage change in odds is equal to –

0.1, indicating that an increase of a reply by one word is associated with a 0.1 percent

decrease in the odds of lobbying success. Individual accounting issue regressions yield

inconsistent signs of the coefficient on CMPR_1ij. These findings suggest that for the total set

of observations more information conveyed in replies are not reflected in an increase of

lobbying success. The findings do not support our hypothesis H4a and seem to contrast

Hansen (2011) who documents a positive association between lobbying success and his proxy

of information quality that is based on the entire comment letter instead of individual replies.

[INSERT TABLE 7]

Across the board, we find significant coefficients on agreement (AGRE_1ij). These findings

support our hypothesis H4b. For the total set of observations, there is a positive association

between agreement and lobbying success, and percentage change in odds suggest that

agreeing (as opposed to disagreeing) with a proposal is associated with a 484.4 percent

increase in lobbying success. The direction of the association, however, differs between the

categories of accounting issues addressed. The coefficient on AGRE_1ij is positive for

standardization issues and technical issues but negative for disclosure issues. The latter is

consistent with a large number of opposing views on disclosure issues that actually led the

IASB to overcome its priors. The findings are consistent with Buckmaster et al. (1994) who

argues that a standard-setter tends to adopt standardization issues without major revisions

while disclosure issues might be substantially modified.

The control variables IFRSj, CNTRj, and LAWj are all not significantly associated with

lobbying success. Moreover, our regressions do not reveal significant coefficients on EUj,

 

25  

USj, and the interest group dummy variables. In line with our univariate results, the positive

coefficients on EUj and the negative coefficients on USj suggest that constituents from EU

countries are more successful than constituents from the US.13

As explained in Section 3.2., using the full set of observations does not necessarily provide

the best specification to test H4a. Panel B of Table 7 presents the logit regression results for

subsets of observations where the constituent disagrees with the proposal expressed in the ED

and where a change was made between the ED and the final standard. For the subset of

observations where the constituent opposes the proposal expressed in the ED (AGRE_1ij=0),

we find a positive and significant association between the comprehensiveness and lobbying

success, and a change in odds equal to 0.6 percent. This finding suggests that more

comprehensive comments provided, i.e. more information conveyed, to substantiate opposing

lobbying positions are supportive to overcome the standard-setter’s priors. The finding is

consistent with Hansen (2011) and supports our hypothesis H4a. Neither coefficient on our

control variables is significant.

For the subset of observations where a change was made between the ED and the final

standard (CHANGEij=1), we find again a positive and significant association between the

comprehensiveness and lobbying success. The change in odds is equal to 1.8 percent and

three times higher than in the specification using observations where the constituent opposes

the proposal. The finding suggests that more information conveyed in comment letters

increase the likelihood to change the position of the IASB. This finding, again, supports our

hypothesis H4a.

Results on our control variables indicate that there is a negative and significant association

between the level of reliance on IFRS (IFRSj) and lobbying success. One explanation for this

unexpected finding might be a high involvement of constituents from countries where

financial statements under IFRS are not required, such as the US. Another explanation relates

to the idea that constituents from countries where financial statements under IFRS are

required impact on the IASB’s proposals expressed in the ED and then agree to these

proposals. Descriptive results rather seem to support the latter argument since constituents

                                                            13 When using only the dummy variables as independent variables, (untabulated) results on the total sample

and on standardization issues reveal positive and significant coefficients on EUj and negative and significant coefficients on PREPj and INDVj. These findings suggest relatively high lobbying success of accounting professions and of constituents from EU countries.

 

26  

from countries where financial statements under IFRS are required show a particularly high

levels of agreement and lobbying success.

We also find a positive and significant association between financial contributions (CNTRj)

and lobbying success for observations where the IASB changed its priors. This finding is in

contrast to Hansen (2011), who finds that the information transfer dominates IASB’s decision

making. Our results suggest that both the information transfer through comprehensive

comments and the influence on IASB’s financial viability have incremental explanatory

power over each other in explaining lobbying success in cases where the standard-setter

changed its priors.

The negative and significant coefficient on USj suggests relatively low lobbying success of

constituents from the US in cases where the IASB actually overcomes its priors. We find

positive and significant coefficients on PREPj and INDVj. These findings suggest that

accounting professions are not the most successful interest group in terms of changing the

IASB’s priors through comments provided in comment letters. The findings, however, are

consistent with the idea that accounting professions tend to impact on the accounting rules

proposed in the ED and then agree to the proposals by comment letters. Such behavior

predominantly aims at the IASB maintaining its proposals expressed in the ED and suggests

that accounting professions are likely to agree with proposals through comment letters. As a

consequence, accounting professions can be expected to be less successful than other interest

groups in changing the IASB’s position on accounting rules proposed in the ED through

comment letters.

4.4. Robustness and further analysis

To assess whether results of our main regressions are robust, we conduct a number of

additional analyses. First, our measure of financial viability (CNTRj) may be biased by

heterogeneous and changing funding mechanisms imposed across countries. Therefore, we

employ the gross domestic product per capita (GDPj) in 2010 as alternative variable (World

Bank, 2014). Across the board, our main results remain unchanged. In contrast to CNTRj, we

find a significant negative association between GDPj and lobbying success for the subsample

where the IASB changed its priors (CHANGEij=1). One explanation might be that the IASB

tries to increase its input legitimacy by including more views, especially of developing

 

27  

countries, in standard-setting decisions, while not focusing on high developed countries

(Larson & Herz, 2013).

Second, political economies suggest that lobbying success is associated to collective action

and group pressure (Mattli & Büthe, 2005; Mahoney, 2007). To assess whether supporting the

majority position constituents take in terms of agreement or disagreement with a proposal

affects our regression results, we include a dummy variable (MAJPij). The variable takes the

value 1 if an individual lobbying position is equal to the majority position in terms of

agreement or disagreement by all constituents, and 0 otherwise. Results reveal no significant

association between MAJPij and lobbying success, while our key findings remain unchanged.

This finding suggests that ceteris paribus supporting the majority position does not affect

lobbying success of individual comments beyond the explanatory variables on individual

comments and constituents used in our main regression analyses.

Third, conceptual work by Standish (2003) suggests that language is an essential attribute for

participation in IASB’s standard-setting process. Jorissen et al. (2013, 244) argue that “lower

familiarity with English increase participation cost for non-native English constituents”.

Empirical findings indicate that a language barrier inhibits constituents’ participation

(Jorissen et al., 2013; Larson & Herz, 2013). To address the influence of language on

constituents’ lobbying success, we include a variable representing the language proficiency

(LANGj) in our logit regression model. Consistent with Larson and Herz (2013), this dummy

variable takes the value 1 if English is a major or, an official language in the constituent’s

home country, or the country was a former English colony (Larson & Herz, 2013; CIA,

2014), and 0 otherwise. Results reveal no significant association between language

proficiency and lobbying success, while our key findings remain unchanged.

Fourth, continuous lobbying suggests continuous information transfer and implies heavy

economic consequences of pension accounting imposed on the constituent. This in turn is

likely to be associated with heavy private lobbying as well. To test the effect of continuous

lobbying on lobbying success, we include the dummy variable CONTj that takes the value 1 if

a constituent submits comment letters on the DP and the ED, and 0 otherwise. We find no

association between continuous lobbying and lobbying success while our key findings remain

unchanged. To mitigate the effect of constituents that are highly involved in IASB’s due

process, we rerun our logit regression excluding the 10 percent or the 20 percent most

 

28  

frequent constituents that sent comment letters to the IASB between 2006 and 2012,

respectively (Dobler & Knospe, 2015). Results reveal no qualitative changes compared to our

main analyses, suggesting that our findings are not driven by frequent constituents.

Fifth and following Hansen (2011), we include the factor INFO_TRANSj that measures the

information transfer of an entire comment letter in the logit regression model. INFO_TRANSj

is the result of a factor-analysis of several measures of the information transfer. It includes the

length of comment letter, the percentage of answered questions, and a readability index (RIXj)

calculated according to Anderson (1981, 1983). We would expect a positive coefficient of

INFO_TRANSj. However, empirical findings indicate no consistent association between

INFO_TRANSj and lobbying success. However, we consistently find that CMPR_1ij has

incremental exploratory power over INFO_TRANSj. This implies that the comprehensiveness

of an individual reply on a question posed is associated with lobbying success even while

controlling for the information transfer of the entire comment letter.

Finally, we take the perspective of success per constituent yielding a more aggregated view

on lobbying success across individual replies and employ a linear regression model using

SUCC_2j as dependent variable. We use CMPR_2j and AGRE_2j as research variables and

exclude the question-specific control variables; the remaining independent variables are the

same as in the main model. The results of the linear regressions are qualitatively similar to

those of our main analysis.

5. Conclusions

This paper provides evidence on the participation, the content, and the success of lobbying

towards the IASB by analyzing comment letters submitted in course of the due process

leading up to the amended IAS 19 issued in June 2011.

Our results on participation indicate that accounting professions (as second most active

interest group) and constituents from EU countries frequently respond to the DP and the ED.

The findings seem to support criticism on heavy involvement of both – accounting

professions and constituents from EU countries – in the IASB’s standard-setting process

threatening the legitimacy of the standard-setter. We find more participation in response to the

ED as compared to the DP. The increase in participation the later stage of the due process is

particularly strong for preparers and US constituents and inconsistent with Sutton’s (1984)

 

29  

prediction. One explanation could be that some constituents do not have sufficient resources

to address a large number of due process documents and tend to focus on more developed

proposals in EDs instead of DPs.

Our results on the content of comment letters reveal differences in the level of completeness

of comments provided and the level of agreement between accounting issues, constituents’

interest group affiliation, and geographic origins. Our findings do not support Sutton’s (1984)

prediction that preparers focus on standardization issues while users focus on disclosure

issues. Rather we find that all interest groups disagree with disclosure rules proposed in the

ED, yielding a vivid example where even users disagree with enhanced disclosure

requirements. Apart from disclosure issues, we find a pattern where accounting professions

provide more complete sets of comments and are more in support of proposed rules than

preparers or users. This finding suggests that accounting professions use comment letters to

increase their own and the IASB’s legitimacy. Constituents from the EU provide more

complete sets of comments than constituents from the US. This seems consistent with

constituents’ cost-benefit considerations since constituents from EU countries are directly

affected by amended IASB standards.

Our univariate results on lobbying success suggest that accounting professions (constituents

from EU countries) are overall more successful than prepares (US constituents). These

findings seem to support criticism on the heavy influence of both groups of constituents in the

IASB’s standard-setting process. Lobbying success of accounting professions may be driven

by the high proportion of comments agreeing with a proposal in this interest group which

makes it more likely to be successful since the standard-setter may maintain its priors. This

relation is consistent with the idea that accounting professions impact on the rules proposed in

the standard-setter’s due process document and then agree to the proposals by comment

letters. Multivariate results reveal that lobbying success is associated with the constituents’

lobbying position in terms of agreement or disagreement. In cases where the constituents

disagree with a proposal or where the IASB changes a rule in the final standard, information

transfer in terms of the comprehensiveness of individual comments is positively associated

with lobbying success. These findings suggest that it is important to substantiate disagreement

with proposed rules in order to overcome the IASB’s priors.

 

30  

Our findings have implications for the recent debate on the heavy impact of accounting

professions and the EU on the development of IASB standards and the legitimacy of the

IASB. The single-case approach adopted in this paper makes it difficult to generalize the

results. Yet, this paper should be seen as a contribution to the emerging body of research on

lobbying towards the IASB by taking an integrated perspective on the attributes of lobbying

and by covering key stages of a typical due process in a highly relevant project. Given limited

and inconclusive evidence to date (Hansen, 2011; Giner & Arce, 2012), further research on

lobbying success in the international arena will be warranted. Based on this paper, one avenue

of future research is to focus on cases where a change between a proposed and a final standard

was made in a multi-case approach.

 

31  

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Table 1 Description of variables

Variable Definition

CMPL_1ij dummy variable that equals 1 if constituent j replies to question i, and 0 otherwise

CMPL_2j ratio of number of questions replied to by constituent j to the number of questions posed in the ED

CMPR_1ij number of words in the constituent j’s reply to question i posed in the ED CMPR_2j ratio of cumulated number of words of constituent j’s replies to the

number of questions posed in the ED AGRE_1ij dummy variable that equals 1 if proposal i in the ED is agreed to by

constituent j, and 0 otherwise AGRE_2j ratio of number of proposals agreed to by constituent j to the number of

questions replied to SUCC_1ij dummy variable that equals 1 if constituent j’s position to a proposal i in

the ED is reflected in the final standard, and 0 otherwise SUCC_2j sum of individual codings on SUCC_1ij divided by the number of

questions constituent j replied to IFRSj level of regulatory reliance on IFRS taking the value 1 if IFRS are not

permitted in constituent j’s home country, 2 if IFRS are permitted, and 3 if IFRS are required for all or some financial statements (or if constituent j is a European institution or an international accounting firm)

CNTRj financial contributions of the constituent j’s home country (or individually listed international constituents) to the IASB Foundation in 2010

LAWj rule of law in constituent j’s home country as of 2010 (Hansen, 2011; World Bank, 2014)

EUj dummy variable that equals 1 if constituent j’s home country is a member state of the EU, and 0 otherwise

USj dummy variable that equals 1 if constituent j’s home country is the US, and 0 otherwise

PREPj dummy variable that equals 1 if constituent j is a preparer, and 0 otherwise

USERj dummy variable that equals 1 if constituent j is a user, and 0 otherwise REGUj dummy variable that equals 1 if constituent j is a regulator, and 0

otherwise INDVj dummy variable that equals 1 if constituent j is an individual, and 0

otherwise

 

40  

Table 2 Participation through comment letters submitted on the DP and the ED

Panel A. Participation per interest group

DP ED DP + ED Both phases (CONTj=1) χ² test

N(DP) vs. N(ED)

N % N % N % N % Total 150 100.0 227 100.0 377 100.0 97 100.0 <0.001*** Preparers 83 55.3 135 59.5 218 57.8 56 57.7 <0.001*** Users 11 7.3 16 7.0 27 7.2 7 7.2 0.182 Accounting professions 26 17.3 35 15.4 61 16.2 17 17.5 0.249 Regulators 22 14.7 31 13.7 53 14.1 16 16.5 0.216 Individuals 8 5.3 10 4.4 18 4.8 1 1.0 0.637 2 All <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** 2 Preparers vs. Users <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001***

Panel B. Participation per geographic origin

***, **, * indicate significance at 1%, 5%, and 10%, respectively. In case of less than five observations (South America and Africa), we do not perform χ² tests.

DP ED DP + ED Both phases (CONTj=1) χ² test

N(DP) vs. N(ED)

Europe 88 58.7 105 46.3 193 51.2 54 55.7 0.221 thereof: EU 73 48.7 90 39.6 163 43.2 44 45.4 0.183 North America 24 16.0 55 24.2 79 21.0 14 14.4 <0.001*** thereof: US 12 8.0 41 18.1 53 14.1 7 7.2 <0.001*** South America 3 1.3 3 0.8 Africa 2 1.3 4 1.8 6 1.6 1 1.0 Asia–Oceania 24 16.0 44 19.4 68 18.0 16 16.5 0.015** International 12 8.0 16 7.0 28 7.4 12 12.4 0.450 2 All <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** <0.001*** 2 EU vs. US <0.001*** <0.001*** <0.001*** 0.004*** <0.001*** <0.001*** <0.001*** <0.001***

 

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Table 3 Comparative results on the level of completeness (CMPL_2j) of comment letters

Panel A. Descriptive statistics and probabilities of Wilcoxon tests for pairwise differences between categories of accounting issues

Mean total Mean

standardization

Mean disclosure

Mean technical

Standard-ization vs. Disclosure

Standard-ization vs. Technical

Disclosure vs. Technical

Total (N=189) 0.790 0.858 0.815 0.679 0.012** <0.001*** <0.001*** Preparers (N=113) 0.763 0.827 0.794 0.650 0.122 <0.001*** <0.001*** Users (N=13) 0.704 0.832 0.743 0.500 0.441 0.011** 0.075* Accounting professions (N=31) 0.913 0.944 0.876 0.899 0.050** 0.173 0.109 Regulators (N=23) 0.850 0.944 0.862 0.711 0.127 0.003*** 0.036** Individuals (N=9) 0.675 0.757 0.833 0.444

Mean total Mean

standardization

Mean disclosure

Mean technical

Standard-ization vs. Disclosure

Standard-ization vs. Technical

Disclosure vs. Technical

Europe (N=89) 0.833 0.886 0.873 0.730 0.584 <0.001*** <0.001*** thereof: EU (N=76) 0.815 0.870 0.860 0.707 0.726 <0.001*** <0.001*** North America (N=39) 0.713 0.788 0.769 0.567 0.500 <0.001*** 0.001*** thereof: US (N=27) 0.656 0.727 0.716 0.514 0.875 0.006*** 0.007*** South America (N=2) 0.940 0.955 1.000 0.875 Africa (N=4) 0.980 0.955 1.000 1.000 Asia–Oceania (N=42) 0.701 0.816 0.679 0.560 0.004*** <0.001*** 0.075** International (N=13) 0.935 0.965 0.910 0.913 0.285 0.109 0.785

 

42  

Panel B. Probability of Mann–Whitney tests for pairwise differences between interest groups and geographic origins

Interest groups Total Standardization Disclosure Technical

Preparers vs. Users 0.169 0.382 0.635 0.194

Preparers vs. Accounting professions <0.001*** 0.020** 0.374 0.001***

Preparers vs. Regulators 0.084* 0.084* 0.319 0.596

Users vs. Accounting professions <0.001*** 0.006*** 0.292 0.002***

Users vs. Regulators 0.017** 0.031** 0.278 0.142

Accounting professions vs. Regulators 0.132 0.651 0.825 0.027**

Geographic origin Total Standardiza

tionDisclosure Technical

Europe vs. North America <0.001*** 0.028** 0.015** 0.013**

Europe vs. Asia–Oceania 0.002*** 0.159 0.369 0.909

North America vs. Asia–Oceania 0.590 0.979 0.256 0.773

EU vs. US 0.035*** 0.037*** 0.008*** 0.051**

EU vs. Rest of the world 0.371 0.401 0.079* 0.601

US vs. Rest of the world 0.082* 0.069* 0.190 0.074*

***, **, * indicate significance at 1%, 5%, and 10%, respectively. In case of less than five observations (South America and Africa), we do not perform Wilcoxon and Mann-Whitney tests. Variable definitions see Table 1.    

 

43  

Table 4 Comparative results on the level of agreement (AGRE_2j) in comment letters

Panel A. Descriptive statistics and probabilities of Wilcoxon tests for pairwise differences between categories of accounting issues

Mean total Mean

standardization

Mean disclosure

Mean technical

Standard ization vs. Disclosure

Standard-ization vs. Technical

Disclosure vs. Technical

Total (N=189) 0.607 0.712 0.383 0.677 <0.001*** 0.076* <0.001*** Preparers (N=113) 0.562 0.671 0.357 0.632 <0.001*** 0.054* <0.001*** Users (N=13) 0.603 0.717 0.276 0.655 0.006*** 0.959 0.150 Accounting professions (N=31) 0.726 0.831 0.456 0.777 <0.001*** 0.879 <0.001*** Regulators (N=23) 0.726 0.795 0.466 0.803 0.001*** 0.816 0.003*** Individuals (N=9) 0.478 0.596 0.396 0.518

Mean total Mean

standardization

Mean disclosure

Mean technical

Standard- ization vs. Disclosure

Standard-ization vs. Technical

Disclosure vs. Technical

Europe (N=89) 0.648 0.741 0.445 0.719 <0.001*** 0.392 <0.001*** thereof: EU (N=76) 0.631 0.730 0.424 0.699 <0.001*** 0.323 <0.001*** North America (N=39) 0.574 0.698 0.321 0.728 <0.001*** 0.713 <0.001*** thereof: US (N=27) 0.530 0.647 0.343 0.704 <0.001*** 0.503 <0.001*** South America (N=2) 0.849 0.859 0.833 0.833 Africa (N=4) 0.775 0.836 0.458 0.938 Asia–Oceania (N=42) 0.509 0.619 0.279 0.501 <0.001*** 0.079* 0.002*** International (N=13) 0.661 0.788 0.333 0.699 0.008*** 0.182 0.050* EU (N=76) 0.631 0.730 0.424 0.699 <0.001*** 0.323 <0.001*** US (N=27) 0.530 0.647 0.343 0.704 <0.001*** 0.503 <0.001*** Rest of the World (N=86) 0.612 0.717 0.358 0.652 <0.001*** 0.079* <0.001***

 

44  

Panel B. Probability of Mann–Whitney tests for pairwise differences between interest groups and geographic origins

Interest groups Total Standardiza

tionDisclosure Technical

Preparers vs. Users 0.908 0.706 0.195 0.635

Preparers vs. Accounting professions <0.001*** 0.001*** 0.234 0.025**

Preparers vs. Regulators 0.003*** 0.023** 0.157 0.058*

Users vs. Accounting professions 0.025** 0.046** 0.096* 0.420

Users vs. Regulators 0.050* 0.131 0.080* 0.568

Accounting professions vs. Regulators 0.733 0.580 0.810 0.629

Geographic origin Total Standardiza

tionDisclosure Technical

Europe vs. North America 0.183 0.236 0.093* 0.648

Europe vs. Asia–Oceania 0.024** 0.069* 0.017** 0.041**

North America vs. Asia–Oceania 0.080* 0.360 0.564 0.067*

EU vs. US (N=189) 0.211 0.140 0.288 0.681

EU vs. Rest of the world (N=189) 0.734 0.709 0.250 0.568

US vs. Rest of the world (N=189) 0.171 0.208 0.737 0.414

***, **, * indicate significance at 1%, 5%, and 10%, respectively. In case of less than five observations (South America and Africa), we do not perform Wilcoxon and Mann-Whitney tests. Variable definitions see Table 1.    

 

45  

Table 5 Comparative results on lobbying success (SUCC_2j)

Panel A. Descriptive statistics and probabilities of Wilcoxon tests for pairwise differences between categories of accounting issues

Mean total Mean

standardization

Mean disclosure

Mean technical

Standard- ization vs. Disclosure

Standard-ization vs. Technical

Disclosure vs.

Technical Total (N=189) 0.591 0.649 0.598 0.538 <0.001*** <0.001*** 0.007*** Preparers (N=113) 0.564 0.621 0.603 0.518 0.001*** <0.001*** 0.010** Users (N=13) 0.614 0.668 0.583 0.566 0.131 0.036** 0.833 Accounting profession (N=31) 0.653 0.725 0.615 0.526 0.016** <0.001*** 0.050* Regulators (N=23) 0.643 0.703 0.564 0.615 0.016** 0.047** 0.477 Individuals (N=9) 0.547 0.560 0.583 0.601

Mean total Mean

standardization

Mean disclosure

Mean technical

Standard- ization vs. Disclosure

Standard-ization vs. Technical

Disclosure vs.

Technical

Europe (N=89) 0.624 0.686 0.625 0.550 <0.001*** <0.001*** 0.013** thereof: EU (N=76) 0.626 0.683 0.635 0.549 0.003*** <0.001*** 0.009*** North America (N=39) 0.546 0.588 0.579 0.565 0.039** 0.105 0.342 thereof: US (N=27) 0.488 0.534 0.532 0.560 0.032** 0.459 0.948 South America (N=2) 0.530 0.668 0.333 0.479 Africa (N=4) 0.624 0.717 0.542 0.563 Asia–Oceania (N=42) 0.553 0.608 0.576 0.484 0.163 0.001*** 0.502 International (N=13) 0.624 0.693 0.592 0.548 0.157 0.100 0.212 EU (N=76) 0.626 0.683 0.635 0.549 0.003*** <0.001*** 0.009*** US (N=27) 0.488 0.534 0.532 0.560 0.032** 0.459 0.948 Rest of the world (N=86) 0.592 0.656 0.584 0.538 0.001*** <0.001*** 0.140

 

46  

Panel B. Probability of Mann–Whitney tests for pairwise differences between interest groups and geographic origins

Interest groups Total Standardiza

tionDisclosure Technical

Preparers vs. Users 0.446 0.795 0.678 0.893

Preparers vs. Accounting professions 0.014** 0.016** 0.744 0.600

Preparers vs. Regulators 0.138 0.119 0.280 0.231

Users vs. Accounting professions 0.519 0.177 0.558 0.661

Users vs. Regulators 0.779 0.352 0.754 0.533

Accounting professions vs. Regulators 0.375 0.477 0.235 0.670

***, **, * indicate significance at 1%, 5%, and 10%, respectively. In case of less than five observations (South America and Africa), we do not perform Wilcoxon and Mann-Whitney tests. Variable definitions see Table 1.    

Geographic origin Total Standardiza

tionDisclosure Technical

Europe vs. North America 0.004*** 0.491 0.979 0.011**

Europe vs. Asia–Oceania 0.026** 0.071* 0.161 0.150

North America vs. Asia–Oceania 0.824 0.520 0.334 0.002***

EU vs. US (N=189) <0.001*** 0.002*** 0.003*** 0.750

EU vs. Rest of the world (N=189) 0.072* 0.187 0.067* 0.264

US vs. Rest of the world (N=189) 0.014** 0.009*** 0.096* 0.689

 

47  

Table 6 Descriptive statistics on and correlations between variables used in the regression model (N=3,344)

Variable Mean SD [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] [12] SUCC_1ij 0.617 0.486 [1] ‒0.026 0.332*** 0.056*** ‒0.033* 0.030* 0.051*** ‒0.044** ‒0.030* 0.008 0.006 ‒0.008 CMPR_1ij 63.185 99.524 [2] ‒0.110*** ‒0.357*** ‒0.037** 0.185*** 0.030* ‒0.068*** 0.077*** 0.179*** ‒0.006 0.001 ‒0.072*** AGRE_1ij 0.664 0.472 [3] 0.332*** ‒0.287*** 0.047*** ‒0.088*** 0.007 0.037** ‒0.020 ‒0.102*** 0.004 0.039** ‒0.043** IFRSj 2.487 0.809 [4] 0.050*** ‒0.013 0.035** ‒0.243*** 0.440*** 0.614*** ‒0.663*** ‒0.023 0.067*** 0.046*** ‒0.133*** CNTRj 768,769 630,228 [5] ‒0.044** 0.117*** ‒0.103*** ‒0.418*** ‒0.152*** 0.103*** 0.594*** 0.202*** 0.082*** ‒0.227*** ‒0.002 LAWj 1.447 0.672 [6] 0.008 0.095*** ‒0.055*** 0.396*** 0.330*** 0.256*** ‒0.150*** 0.193*** 0.018 ‒0.101*** ‒0.116*** EUj 0.463 0.499 [7] 0.052*** ‒0.031* 0.037** 0.589*** ‒0.079*** 0.354*** ‒0.363*** 0.045*** 0.034* ‒0.036** ‒0.016 USj 0.132 0.339 [8] ‒0.044** 0.054*** ‒0.020 ‒0.719*** 0.700*** 0.106*** ‒0.363*** 0.138*** ‒0.007 ‒0.147*** 0.008 PREPj 0.608 0.488 [9] ‒0.030* 0.087*** ‒0.102*** ‒0.016 0.185*** 0.282*** 0.045*** 0.138*** ‒0.318*** ‒0.470*** ‒0.272*** USERj 0.061 0.239 [10] 0.008 ‒0.016 0.004 0.064** 0.067** 0.090** 0.034* ‒0.007 ‒0.318** ‒0.096*** ‒0.056*** REGUj 0.124 0.330 [11] 0.006 0.012 0.039** 0.046*** ‒0.220*** ‒0.185*** ‒0.036** ‒0.147*** ‒0.470*** ‒0.096*** ‒0.082*** INDVj 0.045 0.208 [12] ‒0.008 ‒0.051*** ‒0.043** ‒0.139*** 0.016 ‒0.143*** ‒0.016 0.008 ‒0.272*** ‒0.056*** ‒0.082***

Spearman (Pearson) correlations are presented above (below) the diagonal. ***, **, * indicate significance at 1%, 5%, and 10%, respectively. Variable definitions see Table 1.  

 

48  

Table 7 Logit regression results on lobbying success

Panel A. Results for the full sample and per accounting issue

Exp. sign

Total Standardization

Disclosure Technical

Beta Percent change in

odds

Beta Percent change in

odds

Beta Percent change in

odds

Beta Percent change in

odds CMPR_1ij + –0.001** –0.1 –0.001 –0.1 <0.001 0.0 0.001 0.1 AGRE_1ij +/– 1.765*** 484.4 3.119*** 2163.2 –0.318* –27.2 2.314*** 911.1 IFRSj + –0.008 –0.8 –0.048 –4.6 –0.090 –8.6 0.144 15.5 CNTRj + <0.001 0.0 <0.001 0.0 <0.001 0.0 <0.001 0.0 LAWj + 0.130 13.9 0.213 23.7 0.202 22.4 0.295 34.4 EUj + 0.079 8.2 0.168 18.3 0.131 14.0 –0.147 –13.7 USj – –0.303 –26.2 –0.556 –42.7 –0.409 –33.6 0.213 23.7 PREPj – 0.006 0.6 –0.001 –0.0 –0.104 –9.9 0.137 14.7 USERj – 0.032 3.3 –0.001 –0.1 –0.176 –16.1 –0.281 –24.5 REGUj – –0.047 –4.6 –0.094 –8.9 –0.106 –10.0 0.137 14.7 INDVj – –0.020 –2.0 –0.132 –12.3 –0.163 –15.1 0.728 107.1 Constant Included Included Included Included Included Included Included Included ∑ Question_Dummy Included Included Included Included Included Included Included Included Nagelkerkes R² 0.410 0.559 0.230 0.486 N 3,344 1,604 833 907 All VIF <4.664 <4.840 <4.895 <4.326 Condition index 27.042 25.746 25.210 25.207

 

49  

Panel B. Results for sub-samples with AGREij=0 and CHANGEij=1

Exp. sign

AGREij=0 CHANGEij=1

Beta Percent change in

odds

Beta Percent change in

odds CMPR_1ij + 0.006*** 0.6 0.018*** 1.8 IFRSj + –0.529 –41.1 –0.365* –30.5 CNTRj + <0.001 0.0 <0.001*** 0.0 LAWj + 0.253 28.7 0.263 30.0 EUj + 0.085 8.9 –0.189 –17.2 USj – –1.153 –68.4 –1.990*** –86.3 PREPj – –0.213 –19.2 0.668*** 95.0 USERj – 0.082 8.6 0.582 78.9 REGUj – –0.607 –45.5 0.241 27.2 INDVj – –0.079 –7.6 1.198*** 231.3 Constant Included Included ∑ Question_Dummy Included Included Nagelkerkes R² 0.910 0.443 N 1,121 1,034 All VIF <6.039 <4.715 Condition index 27.129 23.888

***, **, * indicate significance at 1%, 5%, and 10%, respectively. The percent change in odds measures the percentage change in the odds of a successful outcome for a unit change in independent variables. The last four lines in Table 7 present the results on Nagelkerkes R², as a measure of the goodness of fit, the sample size N, the highest VIF, and the condition index. Variable definitions see Table 1.    

 

50  

Appendix A. Comment letters submitted to the IASB on the Discussion Paper (DP) and the Exposure Draft (ED)

Panel A. Participation per interest group

DP ED DP + ED Both phases (CONT=1) N % N % N % N % Preparers Financial service business 14 9.3 19 8.4 33 8.8 6 6.2 Business associations 14 9.3 17 7.5 31 8.2 12 12.4 Cooperatives 33 22.0 77 33.9 110 29.2 27 27.8 Actuaries 22 14.7 22 9.7 44 11.7 11 11.3 Total preparers 83 55.3 135 59.5 218 57.8 56 57.7 Users Analyst organizations 2 1.3 1 0.4 3 0.8 Financial associations 8 5.3 10 4.4 18 4.8 6 6.2 Other user associations 1 0.7 5 2.2 6 1.6 1 1.0 Total users 11 7.3 16 7.0 27 7.2 7 7.2 Accounting professions Accounting professional bodies 18 12.0 27 11.9 45 11.9 12 12.4 Public accounting firms 8 5.3 6 2.6 14 3.7 5 5.2 Other accounting groups 2 0.9 2 0.5 Total accounting professions 26 17.3 35 15.4 61 16.2 17 17.5 Regulators Accounting standard–setters 13 8.7 19 8.4 32 8.5 10 10.3 Stock exchange regulators 1 0.7 2 0.9 3 0.8 1 1.0 Other government entities 8 5.3 10 4.4 18 4.8 5 5.2 Total regulators 22 14.7 31 13.7 53 14.1 16 16.5 Individuals Academics 1 0.7 2 0.9 3 0.8 Practitioners 5 3.3 4 1.8 9 2.4 Other individuals 2 1.3 4 1.8 6 1.6 1 1.0 Total individuals 8 5.3 10 4.4 18 4.8 1 1.0 Total 150 100.0 227 100.0 377 100.0 97 100.0

 

51  

Panel B. Participation per geographic origin

DP ED DP + ED Both phases (CONT=1) N % N % N % N % Europe EU member Austria 2 1.3 2 0.9 4 1.1 1 1.0 Belgium 1 0.7 3 1.3 4 1.1 1 1.0 Finland 1 0.7 1 0.4 2 0.5 France 9 6.0 8 3.5 17 4.5 1 1.0 Germany 16 10.7 12 5.3 28 7.4 8 8.2 Ireland 2 1.3 2 0.9 4 1.1 2 2.1 Italy 1 0.4 1 0.3 Luxembourg 1 0.7 1 0.4 2 0.5 1 1.0 Netherlands 7 4.7 8 3.5 15 4.0 6 6.2 Spain 1 0.7 1 0.3 Sweden 5 3.3 8 3.5 13 3.4 5 5.2 UK 28 18.7 44 19.4 72 19.1 19 19.6 Total EU member 73 48.7 90 39.6 163 43.2 44 45.4

Supranational Europe 7 4.7 5 2.2 12 3.2 5 5.2 Switzerland 7 4.7 7 3.1 14 3.7 4 4.1 Norway 1 0.7 2 0.9 3 0.8 1 1.0 Russian Federation 1 0.4 1 0.3 Total Europe 88 58.7 105 46.3 193 51.2 54 55.7 North America Canada 12 8.0 10 4.4 22 5.8 7 7.2 Mexico 4 1.8 4 1.1 US 12 8.0 41 18.1 53 14.1 7 7.2 Total North America 24 16.0 55 24.2 79 21.0 14 14.4 South America Brazil 1 0.4 1 0.3 Chile 1 0.4 1 0.3 Trinidad and Tobago 1 0.4 1 0.3 Total South America 3 1.3 3 0.8 Africa Kenya 1 0.4 1 0.3 South Africa 2 1.3 2 0.9 4 1.1 1 1.0 Zambia 1 0.4 1 0.3 Total Africa 2 1.3 4 1.8 6 1.6 1 1.0

 

52  

Asia–Oceania Australia 9 6.0 11 4.8 20 5.3 5 5.2 China 2 0.9 2 0.5 Hong Kong 4 1.8 4 1.1 India 1 0.7 6 2.6 7 1.9 1 1.0 Israel 2 0.9 2 0.5 Japan 9 6.0 13 5.7 22 5.8 7 7.2 Malaysia 1 0.7 1 0.4 2 0.5 1 1.0 New Zealand 1 0.7 2 0.9 3 0.8 Pakistan 1 0.7 2 0.9 3 0.8 1 1.0 Republic of Korea 1 0.7 1 0.4 2 0.5 1 1.0 Singapore 1 0.7 1 0.3 Total Asia–Oceania 24 16.0 44 19.4 68 18.0 16 16.5 International 12 8.0 16 7.0 28 7.4 12 12.4 Total 150 100.0 227 100.0 377 100.0 97 100.0