Doctoral Dissertations

Date of Award

5-1991

Degree Type

Dissertation

Degree Name

Doctor of Philosophy

Major

Business Administration

Major Professor

Keith G. Stanga

Committee Members

Jim Reeve, Rick Turpen, David Sylwester

Abstract

The primary objective of this study is to examine the motivations of managers in the accounting standard setting process through the joint consideration of political and economic consequences theories. Prior lobbying studies have used direct economic consequences models derived from the positive theory of Watts and Zimmerman (1978). The major premise underlying the design of this study is the inadequacy of these models in determining the decision to lobby and the position choice decision made by corporate managers. In particular, the positive theory does not adequately explain the existence of lobbying by managers who are not directly affected by a proposed accounting standard. This study introduces the multi-period political aspects of these decisions by considering the past lobbying behavior of managers. The research objectives are accomplished within the context of lobbying on SFAS No. 94, "Consolidation of All Majority-Owned Subsidiaries." The SFAS No. 94 lobbyists and companies with unconsolidated finance-related subsidiaries comprised the sample of 230 used in the study. These companies were segregated into groups based on a lobbying frequency classification. Financial data were collected from COMPUSTAT, annual reports, proxy statements, and various Moody's Manuals. Hypotheses were developed concerning differences between the lobbying frequency groups. These hypotheses were tested by using the univariate Wilcoxon-Mann-Whitney test and a chi-square test. Additional hypotheses were generated to test extant lobbying theories. For the tests of these hypotheses, logit models were developed and tested. The major conclusions of the study indicate the existence of significant differences in corporate characteristics between the frequent lobbyists and the infrequent lobbyists. In addition, frequent lobbyists tended to select different position choices from the infrequent lobbyists. These results imply that some firms may have a policy of lobbying, i.e. some managers will lobby even if the proposed standard does not appear to directly affect them. For these firms, only the position choice decision needs to be made. Therefore, the two decisions may not be independent. The research findings may have implications for the FASB's assessment of the economic consequences of proposed accounting standards.

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