The Politics of Setting Standards for Financial Reporting

Iasb’s short history provides ample anecdotal evidence for the predominance of U.S. interests and the crucial role of FASB in ensuring U.S. influence in international rule-making. In several recent projects, for instance, the IASB has adopted U.S. standards as international standards virtually without change, even in the face of European opposition. Such U.S. predominance is all the more remarkable since “Realist” scholars have argued that the EU increasingly equals the United States on various measures of raw economic power, such as GDP and market capitalization; some other scholars even argue that the EU has governmental regulatory power over financial markets