Theories of regulation help us to find solutions so that investors do not get exploited. Public Interest in theories of regulation pertains to allocation of resources in a regulated manner to safeguard the best interests of public. These distributions may be haphazard or aimed towards satisfying fewer people’s interests, if not regulated. This failure of markets may occur due to several reasons such as: Absence of competition Monopolies try and create barriers of entry to other interested firms Asymmetry of information Products of public goods are produced The scarce resources get deployed towards their purposes with little resources remaining for other requirements. So, to avoid such discrepancies public interest of regulation has to be undertaken by the Government. (Hertog J.D., 1999) The Government will also intervene due to its own personal interests of: Gaining votes To act before any demand from public interested groups arises Acting as neutral arbiters before the issue becomes a problem However, there are cases where Governments also have failed as regulators as they are captured by self-interest of individuals who formed groups. The accounting professionals who have not confirmed themselves to self-regulation and legitimacy have thought of a way out of their irresponsibility. They started capturing the regulator and dictating it through manipulation of accounts. This is possible because accountants argue whether to release relevant or reliable information to the investor. In the guise of these terms, they undertake accounting standards which serve their interest and avoid regulation. Situation: The Act of Sarbanes-Oxley of 2002 is a classic example in this scenario. Public interest has made it mandatory that financial reporting has to adhere to the principles of corporate responsibility. Out of some eleven sections, 6 are construed to be very important as far as compliance matters. The gist of these sections is that financial reporting authorities have to prove their credibility very early by establishing detailed policy of financial security. They cannot relax till the end and try to capture public interests. They are required to report according to the IFRS mandates to the investors. (Anon. 2006). As per this mandate, Accounting Standards should also take into account social and economic consequences so that relevant and reliable information is pronounced to the investors. Private Interest Theory: This theory is based on the assumption that Government is not a neutral arbiter as supposed in public interest theory. It is in fact self-interested rationally due to various reasons such as: To avoid dispute with people of financial power during re-election To transfer their power readily if people who can help them in re-election so require. If they are in power, they would like to increase their wealth by doing so. If not in power, they want to attain power and so listen to these private individuals. There are many examples of private interest. The Oil Spill in Deep Waters in 2010 would help us in understanding the process of domination of private
Financial Accountancy Table of Contents: Sl.No. Particulars Pg. No. Essay 1 Public Interest in Theories in Regulation Situation Private Interest Theory Situation 3 4 5 5 Essay 2 Costs and benefits of Harmonizing Standards 6 Essay 3 Culture has no Influence on Accounting Practices 9 Essay 4 Agency Theory and Its Relation to Accounting 12 Essay 5 Meaning of Efficient Markets and Efficient Market Hypothesis 15 Essay 1: Public Interest in Theories of Regulation: Theories of regulation pertain to the explanation of allocation of resources in a market economy…
Secondly, there must be no close substitute available for the product offered by the monopolist. Therefore, a sole provider of petroleum cannot be considered a pure monopoly as natural gas is a close substitute for heating or electricity purposes. Thirdly, due to some strong reason there must be barriers to entry and survival of potential competitors in the industry so that the firm’s monopolistic behavior and excessive profits could persist (Baumol, Blinder 2007).
Theory of Message: The communication theory is the process of sending and receiving messages in an understandable way. The perception regarding the communication has significant importance because the scholarly views are different from the general public views.
The Bipartisan Campaign Reform Act was established in 2002 as an amendment to the Federal Election Campaign Ac that had since 1971 been applied in regulating the entire election process in the United States.Although this act borrowed a lot from its predecessor,it had new laws to regulate the election campaign trends in an effort to create a fair platform for all campaigners.
This is particularly the case, given that over the five-year time frame, changes in governmental policy, regulation, and political instability could be potential causes 'f the differences observed. In addition, since auditor choice is generally a multi-period decision, a selection 'f a particular group 'f five years for cross-sectional study in no way aligns with the point in time 'f an auditor change or in any systematic manner with a prospective change.
By prancing managers and appealing straightly to politicians, whistleblowers can play crucial role in unleashing organizational information. Nonetheless, the security of whistleblowers can affect managers' capabilities to regulate employees.
These developments and modifications would probably have a positive affect on the insurance industry and mostly would benefit all sectors of society. Three issues are important for researching the issue of solvency regulation. -
Broadly speaking, 'insolvency' means inability to pay creditors.1 However, depending on the context, this colloquial usage may refer to any one of the several related concepts.2 To clarify definitional matters and to set out common terminology, it is necessary to distinguish between (1) balance sheet insolvency; (2) cash flow insolvency (or financial distress); (3) economic failure (or economic distress); (4) liquidation; (5) reorganization; and (6) insolvency pr
Elements of value, the assets, either tangible or intangible, of a utility that when combined comprise the rate base. These elements can include buildings, resources, equipments, and the lands on which they work. (Phillips 316). Some intangible elements of value to the public utility might include the following: working capital or property reserved for future use, customer contributions and tax deferrals, and construction work in progress.