Transplanting Anglo-American accounting oversight boards to a diverse institutional context

Abstract

The introduction of accounting and auditing oversight boards (OBs) has been promoted on a global scale as a key component of the international financial architecture that has emerged over the past two decades. Such institutions, modeled on the Anglo-American tradition, are domestically organized and embedded within distinctively diverse institutional contexts. Their role is to ease agency problems, improve the quality of financial reporting, and help provide stability in the global financial system. We employ an institutional approach, located within the broader political economy framework of global capitalism, to examine the establishment and operation of the new regulatory regime in Greece. Greece, a member of the European Union, exhibits characteristics of a "delegative" democracy, i.e. a traditionally weak institutionalization, reform (in)capacity problems and a clientelistic political system. Our case study shows that the formation and operation of the newly-established system of oversight is conditioned by local political and economic constraints and, thus, does not automatically translate into concrete benefits for the quality of financial reporting. We also draw attention to the structural mismatch between a progressing globalized financial integration and the fragmented nature of the system of oversight, and illustrate that OBs' independence from local governments is an important but neglected issue.

An examination of the Vietnamese emerging market economy: understanding how and why auditors have responded to the audit law reforms

“…Internationally, the history of corporate accounting and auditing is replete with failures and scandals, followed by waves of new regulation (Caramanis et al ., ). In the past decade alone, we have seen financial collapses and economic strain, and it has been argued that external auditing was part of the structure that went wrong (Chambers, ).…”

Institutional work and regulatory change in the accounting profession

“…These bodies include the PCAOB (Public Company Accounting Oversight Board) in the U.S., the POB (Professional Oversight Board) in the UK and umbrella bodies such as the International Forum of Independent Audit Regulators (IFIAR). While "created to watch the watchers" (Richardson, 2009, p.571), their primary purpose is to enhance or restore public confidence in the financial reporting and auditing of public companies (Arnold, 2009;Caramanis, Dedoulis, & Leventis, 2015;Cooper & Robson, 2006;Guenin-Paracini & Gendron, 2010;Hazgui & Gendron, 2015;Humphrey, Loft, & Woods, 2009;Malsch & Gendron, 2011;Wainberg, Kida, Piercey, & Smith, 2013). The efficacy of these bodies, which are frequently domestically organised and embedded within diverse socio-political national contexts, has come under recent scrutiny (Anantharaman, 2012;Caramanis et al, 2015;Samsonova-Taddei & Humphrey, 2015).…”

“…This has unveiled their impotence and partial influence in several settings (Canning & O'Dwyer, 2013;Caramanis et al, 2015;Malsch & Gendron, 2011). While significant research on oversight bodies such as the PCAOB focuses on the effects of their inspection processes and the wider impacts of their enforcement actions (Abernathy, Barnes, & Stefaniak, 2013;Lohlein, 2016), we have little in-depth knowledge of individuals' efforts to shape these bodies and establish their operational effectiveness.…”

“…Black (2008) warns against expecting that legal validity will grant legitimacy to a regulator in terms of it "having a right to govern both by those it seeks to govern and those on behalf of whom it purports to govern" as such a crude interpretation may be "irrelevant, or at least unproductive" (p.145). Certainly, prior work suggests that such authority is rarely automatic and can be continuously contested (see: Canning & O'Dwyer, 2013;Caramanis et al, 2015;Hazgui & Gendron, 2015;O'Regan & Killian, 2014), especially as a regulatory body evolves over time.…”

“…Second, while prior work has focused on the processes through which professional accounting regulation has been developed and interpreted (see, for example, Canning & O'Dwyer, 2013;Caramanis et al, 2015;MacDonald & Richardson, 2004;Malsch & Gendron, 2011;O'Regan & Killian, 2014;Shapiro & Matson, 2008;Yee, 2012;Young, 1994Young, , 1995, our study is important in that it explicitly examines how, in their diverse engagements with regulatees (and others), oversight bodies "jockey for positions that confer legitimacy on [them] as they attempt to ensure relevance and survival" (Gillis, Petty, & Suddaby, 2014, p.897) during a dynamic process of attempted realignment. By examining the shifting nature and impact of the interrelated forms of institutional work underpinning these engagements, the paper uncovers how certain elements of "the network of cognate organizations to which … [a regulatory body] is linked", particularly the professional accounting bodies (PABs) it seeks to regulate, can influence its "ability to act" (Richardson, 2009, p.572) and potentially constrain its capacity to exercise power over the accounting profession (Richardson & Eberlein, 2011, p.219).…”