Abigail Allen, Accounting and Management DBA
Thesis Chair: Paul Healy
Agenda Setting at the FASB: Evidence from the Role of the FASAC
I investigate the historical significance of constituent preferences in the determination of the FASB's technical agenda for standard setting. Specifically, I examine the extent to which the FASB's selection of projects is a function of the contemporaneous preferences of auditor, preparer and financial representatives on the Financial Accounting Standards Advisory Council (FASAC)-an institution deliberately composed to "represent the Board's constituency in microcosm" and formally tasked to consult with the FASB. Disaggregated survey data on FASAC member preferences is available for 323 potential projects about which members were surveyed between 1982 and 2006. Results suggest that constituent priorities are a significant determinant in the FASB's project selections, and that influence is disproportionately concentrated, prior to 2002, amongst "Big N" audit firms. Post 2002, Big N audit firm priorities no longer appear significant; instead, priorities of financial constituents including small investors, creditors, and financial intermediaries command the greatest weight in FASB agenda decisions. Across both periods, I find no evidence of significant preparer influence in agenda formation. Results of my analysis are robust to the inclusion of FASB member ex-ante agenda preferences, SEC project priorities and year-fixed effects.