On Commitment Toward Knowledge Templates in Global Standard Setting: The Case of the FASB‐IASB Revenue Project

Abstract

ABSTRACTThis article explores commitment to knowledge templates, in this case competing measurement models, in global standard‐setting processes. In particular, I examine the positions of board members of the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) on a proposal to use fair value accounting in the measurement of revenue. The proposal to measure revenue at fair value was deliberated between 2002 and 2008 as part of the joint revenue project of the FASB and the IASB. I analyze narratives of the board proceedings on the revenue project, which reveal the positions of board members over the life of the proposal. To make sense of these positions, I use Durocher and Gendron's (2014) framework on epistemic commitment, which speaks to one's allegiance to knowledge templates. The analysis shows that individual board member commitment to different knowledge templates is fairly static despite dynamic and contentious debate on this particular proposal. While stable, board member reactions to the proposed shift toward fair value fall into recognizable patterns showing how commitment to different templates entails prioritizing of different core principles and appeals to higher authorities. Finally, the analysis shows how commitment to knowledge templates varies depending on the professional affiliations of board members. For instance, the analysis shows relatively greater consistency of commitment between board members affiliated with academia and corporate preparers than between auditors. Overall, the study indicates the importance of micro‐level features in explaining the development of macro‐level accounting policy. These features are crucial to enhancing our broader understanding of the way in which accounting standards and rules ultimately develop.