Business Ethics Essay Example | Topics and Well Written Essays - 2500 words - 2

Business Ethics - Essay ExampleOther research on lobbying behaviour and the effect of a proposed financial accounting standard on pro forma can income provides mixed results. For example, Watts and Zimmerman (1978) key that economic self-interests motivate a large firm to lobby for an accounting standard that reduces pro forma crystallize income.Yet, other studies (Martens and Stevens, 1993 Dechow et al., 1996) find no relationship between lobbying behaviour and the effect of the proposed standard on net income. The present study extends prior research by examining whether economic self-interests affect corporate lobbying on disclosure, particularly onPrior to the 1993 Exposure Draft (ED) on FAS 123, Accounting for Stock-Based Compensation, corporations provided relatively little information on the nurture of stock-based compensation (SBC) held by top management. Essentially, corporations reported the SBC for only the top five executives and only in annual proxy statements as r equired by the U.S. Securities and Exchange Commission (SEC).The ED proposed recognizing for the first conviction in annual reports the amount of SBC for all employees. Comment letters to the FASB on FAS 123 almost exclusively contrasted recognition of SBC. However, as Walker and Robinson (1993) note, a careful compendium of the substance of comment letters (i.e., analysis beyond simply counting yes/no votes on recognition) can provide additional insights into the politics of the standard-setting process. The on-going analysis of the comment letters reveals that managers supported varying venues and formats of disclosure. Thus, the varying responses to the FASB on the ED for FAS 123 provide a unique opportunity to examine whether economic self-interest motivates lobbying on venues and formats of disclosure of information (Breton Wall course Journal, 5 November 1993).The results of this study indicate that differences in corporate lobbying positions on disclosure are related to the value of corporate SBC. In