Issue Networks, Value Structures and the Formulation of Accounting Standards: An Exercise in Theory Building

This study is an exercise in theory building. It begins from the premise that current theory with respect to the setting of accounting standards is inadequate. We advance current theory by incorporating new ideas from sociology (issues network theory, see Heclo (1978, In: King A (ed) The New American Political System. American Enterprise Institute, Washington, DC, pp 87–124) and social psychology (values structure ideas drawn from Shakun (1988, Evolutionary system design: policy making under complexity and group decision support systems. Holden-Day, Inc., Oakland, CA). In doing so, we extend previous theorizing on the accounting standard setting process (e.g., triocracy theory). Issue network theory holds that groups with intellectual, ideological and economic interests have interests in, and may exert efforts to influence, policy adoption. It is a natural outgrowth of, and important extension to, triocracy theory. We draw on Shakun’s (1988, Evolutionary system design: policy making under complexity and group decision support systems. Holden-Day, Inc., Oakland, CA) Evolutionary Systems Design theory to elucidate a theory of motivation. We argue that complex motivational structures influence the behaviors of the parties to the accounting standard setting process. As part of this effort, we categorize the guiding terminal values, instrumental values and operational goals that guide participant behaviors. We draw on previous literature to document parts of the model.