The relevance of recent financial accounting literature for standard setting: a literature review - doi: 10.4025/enfoque.v26i3.5779

Abstract

This paper offers a summary of the evolution of financial accounting theory and its contribution to accountingstandard setting, but with special emphasis since the work of Ball and Brown (1968). The historic analysisfocuses on the research that has been dominating the discipline from the late 1960s. This paper evolvesfrom the users’ perspective and their problems (the investor) toward the perspective of the preparers andtheir difficulties (the manager), covering the two opposite roles of financial accounting: an instrument formaking investment decisions and a contracting mechanism. The literature review shows that few contributionsof accounting research can be extrapolated to the standard setting process of the FASB. The intendedaudience of this paper is comprised mainly by students who, in a short period of time, need to know thefundamental pieces of research published in financial accounting.