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THE POLITICAL ECONOMY OF INTERNATIONAL ACCOUNTING STDs (theoretical …
THE POLITICAL ECONOMY OF
INTERNATIONAL ACCOUNTING STDs
changes in stds
FVA in valuating business assets
IASB is not the roots of the changes bus as introduced the stds
new stds
harmonized accounting std favour Liberal Market Economies (LMEs) over Coordinated Market Economies (CMEs)
new forms of assets
shift in power from production to finance
more inportan change
valuation of assstes
FVA
assets not traded
who does it -> from seller to market
timing of the estimation
balance sheet approach: valuation of the business second the value of assets in the balanche shett as opposed to cash-flow in income statement
problems
volatility of profits because of the re-measurement of asset
theoretical
perspectives
where is the principal: (managers of financial sector) shareholder are the principals and managers the agent. Shift power from managers to shareholders
FVA in LME o CME: reinforce the finance in the LME in whith finance are already important. CME (importat role of the state and the banks) SMEs are exmpeted
Efficency perspective: FVA better to valuate the future earnings of the business (lower risks, lower return, higher demand, higher comparability. HC tell about the past
Capital pricing, Income Division and Economic Restructuring
private governance of
accounting standards
from private to transanational level. 2005 IFRS binding for listed companies
in UE endorsed by public authority European Commision and Accounting Regulation Committee
advice from EFRAG
the role of transanational
private authority
efficiency: access to global market
speed and flexibility
no political involvement
consequences
rise of the financial sector (more expert)
weak rapresentation of nationally institutionalized economies interests
isolation of accounting strandard setting from society
efficiency advantages of global and private regulation