Abstract
In this paper, we develop and empirically test an institutional governance theory for explaining the decisions by the population of 50 US state governments to adopt Generally Accepted Accounting Principles (GAAP) for external financial reporting. Governmental accounting studies have generally explained the governance choice of an accounting method in terms of the economic consequences of these choices for managerial welfare and other microeconomic determinants of those decisions. While the explanatory power of these models are generally good, there is often a large unexplained variance which is presumably not explainable in terms of the extant agency models of accounting choice. Our study develops an institutional governance theory and demonstrates that institutional governance variables in conjunction with traditional economic agency variables can improve the explanatory power of government accounting choice models. Our empirical results are consistent with the stipulations of the institutional governance theory.
Original language | English (US) |
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Pages (from-to) | 42-59 |
Number of pages | 18 |
Journal | Corporate Ownership and Control |
Volume | 4 |
Issue number | 4 A |
DOIs | |
State | Published - 2007 |
Externally published | Yes |
Keywords
- Accounting principles
- Corporate governance
- Generally Accepted Accounting Principles
- Institutional theory of governance
ASJC Scopus subject areas
- General Business, Management and Accounting