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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

Chapter:
(p.86) 5 Why Fair Value Is the Rule
Source:
Political Standards
Author(s):

Karthik Ramanna

Publisher:
University of Chicago Press
DOI:10.7208/chicago/9780226210889.003.0005

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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