There has been small efforts to investigate the roles of accounting in the regulation process than in the market process. However, regulations process have influenced many accounting choices. This article surveys the recent developments in the regulat...
There has been small efforts to investigate the roles of accounting in the regulation process than in the market process. However, regulations process have influenced many accounting choices. This article surveys the recent developments in the regulation mechanism design literature and interprets their implications to accounting research.
In this prospective, accounting has the same role in the regulation process as in the market process. Recently, the positive accounting theory proposes that accounting and auditing reduces the agency costs in the market process such as owner-manager or debt-equity holder relationship.
This survey shows that accounting can reduce the regulating costs such as information rent. Further, this perspective has the possibility to alter the existing research with regard to the relationships between the regulation and accounting.