Title

Toward an empirical institutional governance theory: Analyses of the decisions by the 50 US State governments to adopt generally accepted accounting principles

Publication Date

1-1-2007

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.

Publication Title

Corporate Ownership and Control

Volume

4

Issue

4 A

First Page

42

Last Page

59

DOI

10.22495/cocv4i4p3

Source Full-text URL

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1181364

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