Relevance of Academic Research and Researchers' Role in the IASB's Financial Reporting Standard Setting

Abstract

The International Accounting Standards Board (IASB) faces a vast number of standard-setting issues at all levels of financial reporting. The purpose of this paper is to explore the relevance of academic research for financial reporting standard setting and the role of academic researchers in the standard-setting process. We contribute to the current debate surrounding International Financial Reporting Standards (IFRS) by drawing inferences from prior findings regarding the role of research in the IASB's standard-setting efforts. After defining three broad categories of standard-setting questions, we explore how the international heterogeneity of its constituency adds constraints to the IASB's work. We then investigate from an epistemological perspective whether and how academic research can inform policy makers. Based on a review of extant literature, we discuss the general criteria which a piece of research should fulfill in order to be perceived as relevant and useful by standard setters. This discussion is followed by more detailed considerations regarding the suitability of different research approaches for each of the three categories of standard-setting questions. We also touch on the subject of inferential problems inherent in most academic accounting research. Since our main objective is to contribute insights relevant to the IASB's efforts, we analyze academics' career systems and their incentives to engage in research intermediation, before discussing possible ways in which interested researchers can channel their insights into the IASB's standardsetting process. Overall, we emphasize the international dimension of IASB standard setting and its implications for relevant research.