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Towards a Multidimensional Model of Power: The International Accounting Standards Board and its Amendment of International Financial Reporting Standard 3 ("Business Combination") Open Access


Other title
accounting standard setting
Type of item
Degree grantor
University of Alberta
Author or creator
Bourne, Michael
Supervisor and department
Cooper, David (Accounting, Operations & Information Systems)
Examining committee member and department
Aitken, Rob (Political Science)
Cooper, David (Accounting, Operations & Information Systems)
Suddaby, Roy (Strategic Management & Organization)
Washington, Marvin (Strategic Mangement & Organization)
Young, Joni J. (University of New Mexico, Accounting)
Faculty of Business
Date accepted
Graduation date
Doctor of Philosophy
Degree level
The dissertation investigates the organizational basis of standard setting at the International Accounting Standards Board (IASB). The data come from texts constructed over the course of Phase II of the IASB’s Business Combinations Project (2002–2007). Consideration is also given to secondary source material, including the extensive literature on accounting standard setting. Theoretically, the dissertation follows from Steven Lukes’s multidimensional model on power (1974; 2005), which provides a robust basis for analyzing actors involved in overt conflicts, the issues they mobilize or avoid, and the systemic forces that shape their preferences. The dissertation makes a theoretical contribution by applying Lukes’s model to expert-based standard setting at the IASB. To this end, the works of Harry Collins (e.g., 1975, 1985; 1992, 2000, 2001, 2010) are applied. Initial consideration is given to the association between the convergence project and developments in the transnational regulatory space. The analysis reveals that the IASB’s efforts to promulgate International Financial Reporting Standards (IFRS) have been made in conjunction with economic globalization, the financialization of the market economy, and mounting American hegemony over global commerce. Consideration is subsequently given to the discursive construction of the IASB’s organization. The argument is advanced that the stated configuration of the IASB’s organization is intended to demonstrate to external authorities and the public that the IASB adheres to high standards of input, throughput, and output legitimacy. However, I suggest that the IASB exhibits a democratic deficit, which is conceived as the board falling short of fulfilling these standards.The ensuing empirical-theoretical work turns to an investigation on how multiple dimensions of power bore on the secretariat and the board’s project for amending International Financial Reporting Standard 3 (IFRS 3, “Business Combinations”). Against the backdrop of the project, I argue that the IASB’s mode of standard setting resembles what I conceive as “regulatory elitism,” whereby the IASB reserved the right to adopt all proposals initially outlined in exposure draft 3 (2005) in the final version of IFRS 3 (2008) despite an overwhelming majority of constituents submitting comment letters to the IASB encouraging it to rescind the proposals. Of particular significance, accounting experts—conceived as senior accountants, auditors, financial executives, analysts, and so forth—rejected the proposals because the IASB failed to communicate what Collins and Evans call the requisite “specialist tacit knowledge” (2002, 2007) on how to apply the acquisition model in practice. Subsequent analyses of the data reveal that the secretariat and the board did not ameliorate the guidance on how to account for a business combination. I associate the IASB’s inaction with two phenomena. First, I suggest that the IASB did not provide detailed procedures on how to apply the acquisition model owing to its institutional preference for fair value accounting, principles-based accounting standard setting, and converging IFRS with U.S. Generally Accepted Accounting Principles. To invoke the terminology Lukes applies in his analysis of the third dimension of power (1974; 2005), mobilization of the IASB’s political bias gave rise to institutional inaction. Second, my investigation on the secretariat’s work and the secretariat and the boards’ formal deliberations in 2006 and 2007 highlights that they failed to elucidate how to apply the model, in part because they had yet to construct the expertise on operationalizing all facets of the acquisition model. An additional level of investigation emphasizes that the secretariat at the IASB played an important role in the amendment of IFRS 3. Its work not only shaped the construction of the IASB’s technical agenda but also the rationales the board invoked to justify making specific decisions, such as spurning a comprehensive analysis of concerns expressed in 37 comment letters submitted to the IASB by actors in the cooperative sector. The episode is conceived as an empirical instance of what Lukes calls “nondecision-making” (1974; 2005). Based on this and other findings, the conclusion is reached that the IASB is not a monolithic institution. That is, the development of IFRS is not the exclusive domain of 16 board members. The unseen hand of the secretariat wielded substantial influence over the IASB’s amendment of IFRS 3.
Permission is hereby granted to the University of Alberta Libraries to reproduce single copies of this thesis and to lend or sell such copies for private, scholarly or scientific research purposes only. Where the thesis is converted to, or otherwise made available in digital form, the University of Alberta will advise potential users of the thesis of these terms. The author reserves all other publication and other rights in association with the copyright in the thesis and, except as herein before provided, neither the thesis nor any substantial portion thereof may be printed or otherwise reproduced in any material form whatsoever without the author's prior written permission.
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