Enhancing the Interface between Standard-setters and Academic Research

Abstract

This article points to gaps between academic research and the needs of accounting standard-setters. In part it attributes those gaps to the academic literature seeming to be inaccessible and oriented to ideas apparently unrelated to the policy-making issues facing standard-setters. As a means of partially reducing that perceived inaccessibility, the paper provides a way for standard-setters to identify and classify the various forms of academic accounting research so that they can evaluate their usefulness. Two prominent strands of research (agency theory/costly contracting and value relevance) are, as illustrations, analysed so that standard-setters can see how they might approach those strands. The paper suggests a users’ needs/demand driven approach to improving understanding, rather than a supply (by academics) driven approach. Finally, the paper explains how the performance metrics faced by academics can be inconsistent with the readiness expressed by standard-setters to have academics assist them. The paper provides a suggestion as to how there could be some alignment of academic performance metrics and standard-setters’ needs.