Abigail Allen is a lecturer of business administration in the Accounting & Management unit at Harvard Business School. Her dissertation research focused on the financial accounting standard setting process. Specifically, her research investigates the impacts of regulator backgrounds, constituent preferences, and lobbying incentives in the FASB’s agenda decisions and the final determination of US GAAP. Professor Allen’s work is forthcoming in the Journal of Accounting and Economics, and it has been cited and discussed in Forbes Magazine and the Harvard Business Review. Her other research interests include the economic consequences of accounting regulation, globalization of accounting standards, fair value accounting, revenue recognition, voluntary disclosure, and sustainability reporting.
Professor Allen graduated with her D.B.A in Accounting and Management from Harvard Business School and also holds Masters and Bachelors degrees in Accounting from University of Southern California. Prior to obtaining her doctorate, Professor Allen worked for Deloitte and Touche as an external auditor in Silicon Valley where she became licensed as a CPA.
Professor Allen is the proud mother of 2 children born during her doctoral studies (Alec Allen 1/25/2011 and Elise Allen 3/23/2013). In her free time, she enjoys tennis, snowboarding, scuba and chess.
Agenda Setting at the FASB: Evidence from the Role of the FASAC
I examine the extent to which the FASB's agenda determination is a function of the contemporaneous preferences of its primary constituents: auditors, preparers, and financial statement users. Using the FASB's consultation with the FASAC as a lens through which to view constituent preferences, I find evidence that from 1982 to 2001 influence on FASB agenda decisions is concentrated among "Big N" audit firms, whereas from 2002 to 2006 the preferences of financial constituents appear most significant. Across both periods, I find no evidence of significant preparer influence in agenda formation, which is in contrast to their documented role in later stages of standard setting. Collectively, the results contribute to our understanding of the influence of constituents in standard setting and highlight a shift in that influence over time.
Lobbying Behavior of Governmental Entities: Evidence from Public Pension Accounting Rules
We examine the lobbying behavior of state governments in the development of recently issued public pension accounting standards GASB 67 and 68. Consistent with opportunistic motivations, we find that states' opposition to the liability increasing provisions embedded in these standards is increasing in the severity of pension plan underfunding, state budget deficits, and the use of high discount rates. Further we find opposing states are subject to more stringent balanced budget requirements and greater political pressure from unions. By contrast, we find evidence that the support from financial statement users for these provisions is amplified in states with poorly funded plans and large budget deficits, suggesting government lobbying is misaligned with a public interest perspective. We also find evidence that user support varies by type: internal users (public employees) overwhelmingly oppose the standards, relative to external users (credit analysts and the broader citizenry) but the difference is moderated in states with constitutionally protected benefits. This finding is consistent with the expectation that pension accounting reform will motivate cuts in pension benefits as opposed to increased levels of funding from the governments. Analyses of 2011 and 2012 state pension reforms confirm that states opposed to accounting reform are more likely to cut pension benefits.
The Auditing Oligopoly and Lobbying on Accounting Standards
We examine how the tightening of the U.S. auditing oligopoly over the last twenty-five years—from the Big 8 to the Big 6, the Big 5, and, then, the Big 4—has affected the incentives of the Big N, as manifest in their lobbying preferences on accounting standards. We find, as the oligopoly has tightened, Big N auditors are more likely to express concerns about decreased "reliability" in FASB-proposed accounting standards (relative to an independent benchmark); this finding is robust to controls for various alternative explanations. The results are consistent with the Big N auditors facing greater political and litigation costs attributable to their increased visibility from tightening oligopoly and with decreased competitive pressure among the Big N to satisfy client preferences (who, relative to auditors, favor accounting flexibility over reliability). The results are inconsistent with the claim that the Big N increasingly consider themselves "too big to fail" as the audit oligopoly tightens.
Abigail's research to date has focused on the financial accounting standard setting process. Specifically, her current projects investigate the impacts of regulator backgrounds, constituent preferences, and lobbying incentives in the determination of US GAAP. Her job-market paper explores formation of the FASB's technical agenda and provides evidence on the influence of constituent preferences on project selection. Abigail's other research interests include the economic consequences of accounting regulation, globalization of accounting standards, fair value accounting, and voluntary disclosure.
Keywords: Financial Accounting;
fair value accounting;
International Accounting Standards;