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Political StandardsCorporate Interest, Ideology, and Leadership in the Shaping of Accounting Rules for the Market Economy$
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Karthik Ramanna

Print publication date: 2015

Print ISBN-13: 9780226210742

Published to Chicago Scholarship Online: May 2016

DOI: 10.7208/chicago/9780226210889.001.0001

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PRINTED FROM CHICAGO SCHOLARSHIP ONLINE (www.chicago.universitypressscholarship.com). (c) Copyright University of Chicago Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in CHSO for personal use.date: 18 September 2021

Why Fair Value Is the Rule

Why Fair Value Is the Rule

The Changing Nature of Standard Setters

(p.86) 5 Why Fair Value Is the Rule
Political Standards

Karthik Ramanna

University of Chicago Press

With auditors and industrial companies focused on their own interests in accounting rulemaking, can we rely on the FASB regulators themselves to represent the public interest? Chapter 5 explores this question. It provides evidence that FASB regulators appear to represent the interests of the industries from which they hail. In particular, regulators from the asset-management industry appear to be behind the rise in fair-value accounting rules, perhaps because such rules enhance compensation levels in the industry. The evidence points to the potential “financialization” of the FASB as the asset-management industry has grown larger. In their potential capture of the FASB, these finance-industry interests have had allies – notably, academics who appear to have been selectively drawn for their support of fair-value accounting. This narrative presents a more complex picture of capture – one that involves the cooption of ideas and ideologies in the service of economic interests. This process is described as “ideological capture.”

Keywords:   asset managers, fair-value accounting, financialization, investment banks, ideological capture

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