Macro and Micro Earnings Manipulation: The Role of Accounting Standard Setting Process

Abstract

Preparers of financial statements are in a
position to influence the view of economic reality presented in
those statements to interested parties. The term 'macromanipulation'
is used to describe the lobbying of preparers
against regulators (accounting standards setters) to persuade
them to produce regulation that is more favorable to the
interests of preparers. The aime of this paper is to introduce a
suggested tool that could be used to ascertain why some
financial accounting standards turn out to the benefit of one of
the stakeholders involved in the process of accounting
standards setting. This paper utilizes the construct of power to
reveal the influences from parties involved in the process of
accounting standards setting. The comprehensive income
reporting standard is used in this paper as an example of these
types of standard that may involve 'macro-manipulation'.