Not applicable Suited for qualitative case study research Yes 224 Studies using

Not applicable suited for qualitative case study

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Not applicable Suited for qualitative case study research? Yes 2.2.4 Studies using regulatory space Young (1994) used ‘regulatory space’ theory to explain agenda setting by the FASB in accounting for loan fees, accounting for leases, depreciation and contribution accounting for non-profit organisations. She addressed the limitations of regulatory space in the motivation of decision-making of individuals by adding the concept of ‘logic of appropriateness’ (March and Olsen 1989) to her theoretical framework. As part of the development of new institutionalism 13 , March and Olson (1989) contrast the ‘logic of consequences’ with the ‘logic of appropriateness’. According to the ‘logic of consequences’, actions are the consequences of a rational actor’s self -interest and preferences. However, this does not sufficiently explain situations, where an actor’s behaviour does not seem to adhere to this logic. As an alternative, a sociological explanation, the ‘logic of appropriateness’ suggests that actors’ behaviour is influenced by norms and rules within a regulatory institutional environment (March and Olsen 1989) . In a ‘logic of appropriateness’ scenario, the agent/actor does not identify alternatives, preferences, etc. as in the rational choice model, but assesses how the situation/environment influences the agent to come to a conclusion about the appropriate behaviour in accordance with norms and rules. In Young’s opinion, the 13 For a more detailed consideration of new institutionalism, please refer to Chapter 4.
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36 ‘logic of consequences’ “understate[s] the importance of societal expectations about the role and purpose of the standard-setter to all facets of the standard-setting process, including agenda formation” (Young 1994, p. 104). Young found that in all three cases considered by the FASB “accounting problems are not simply there. Instead, these problems are constructed by the occupants of regulatory space” (Young 1994, p. 103). Accounting change is a product of the institutional environment, including organisation actors (the FASB, the Securities Exchange Commission (SEC) and the American Institute of Certified Public Accountants (AICPA)), regulation (pre-existing accounting standards) and norms (conceptual framework, etc.). The standard setters do not simply react to environmental pressures, but are part of it s creation and the “appropriateness of standard -setting is inextricably linked to the development of accounting problems” (Young 1994, p. 104). Young concludes that “[t]he studies in this paper illustrate that an understanding of accounting standard - setting cannot be separated from an understanding of the role of accounting claims and expectations about standard-setters that construct a regulatory space for accounting change.” Young’s study is firmly embedded in a sound theoretical framework. Some contrib utions of Young’s (1994, pp. 85-86, 88) study are summarised by Howieson (2009b, p. 13): “her model acknowledges the complexity of the processes by which accounting issues are admitted to the technical agenda and by which standards are formulated. […]
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  • Government, The Land, International Financial Reporting Standards, Financial Accounting Standards Board, Australian Accounting Standards Board, Snow

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