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FREE-MARKET APPROACH AND REGULATORY APPROACH TO STANDARD SETTING IN ACCOUNTING
Finance & Accounting
Pages 8 (2008 words)
Regulatory approach is advocated by the policymakers and this approach has been a centre for debate as to whether it should be implemented or not. The policy makers believe that by regulating the financial market in entities, they can safeguard the interest of the state…
The researcher analyzed the free market approach to standard setting and provided a case study analysis to this approach. Within the free-market approach, the study revealed some theories including the positive accounting theory and agency theory, which recommends that entities should have incentives to make publicly accounting information munificently. The study also examined the regulatory approach, which aims to protect the interests of the public in the marketplace. The study further examined some of the frameworks within the regulatory approaches including the public interest theory and capture theory. Lastly, the researcher provided the case studies for both free-market and regulatory approaches in relation to standard setting in accounting. Lastly, the conclusion was provided that summed up everything that was discussed under the research topic. Assessment of the Free-Market Approach and Regulatory Approach to Standard Setting In Accounting Introduction The increased competitive which result due to increased technology contributing to a global village have encouraged financial analysts, regulators and lobbying groups to take significant interest in the market system. The accounting standards has created an ongoing debate as to whether accountants should regulate or set accounting standards or not. ...
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