Introduction to Accounting Theory
The act and method which taken into account in order to make the particular legislations and frameworks for reduce the negative influences on the business as well as government leaders which highly support to the business entity is known as lobbying. The person and leaders who do lobbying for save the company from negative influencing factors are called as lobbyist. The current case study shows about the lobbying that how it helps to the government and regulatory body in order to make various favorable rules which not impact to the company. Its shows that to manage the corporations as well as overall business entity up to which level lobbying helpful. From the second article it describes that in which ways the lobbying comes under consideration for make and develop the international accounting standards. Another kind of the article shows that how the international companies are taking the lobbying aspect at the workplace in context to the Exposure Draft 8 which is relating to the operating segments.
Corporate Management Lobbying on FAS No. 8
This examined that management lobbying activities provide a basis for assuming the consequences of a determined accounting policy change on firms. Two variables which like to be held with management's accounting decision are firm's debt contracts and the percentage of management's ownership of the firm. This includes both corporate lobbying and changes in financing or operative activities in response to FAS No.8. The lobbying conditions are rechecking by allotting all firms based on the nature of their comments on the drafting. The next section defines the research design including sample selection, collection of data and methodology. The next section contains results and fourth is conclusion.
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In research method, sample is included in it, in which 25 firms are not available so final sample of 54 lob buyers and 116 non lob buyers are taken. The entire letter related to lobbying firm was read to determine the nature of comment (Bonin, 2013). Such comment was in two groups- 16 groups are concerned as difficult practical implementation and 38 firms were concerned various income statement effects.
In data collection four variables which are independent in nature are taken, they are- 1. Foreign sales as a percentage of total consolidated sales, 2. firm size, 3. leverage and 4. Management’s ownership percentage. In this first variable use to measure potential effect. Firm size was choosing to catch various potential considerations in lobbying decisions. Leverage is measured for total debt divided by total asset of the firms. Management's ownership percentage has been measured for the exposure period.
In using methodology, univariate analysis of the characteristics of lob byers versus non-lob-buyers conducted using t-tests on the group means of the independent variables. The non -parametric Mann- Whitney rank subtest used to avoid assuming the independent variables were normally distributed. Since the dependent variable was lob-buyers or non lob- buyers (Dafflon, 2015).
Whole article shows the results as follows- That it makes effect in industry. In such a way, industry effect applied a cross- tabulation contingency test in order to determine whether management lobbying FAS No.8 was influenced by industry affiliation. In this, firms were classified as lob- buyers or non lob- buyers and grouped by their three- digit SIC codes. So that, in this way it make an industry effect.
Next result comes arise that include total sample analysis. The result for the one-directional test appear , where the mean values for non lobber group were compared to the mean values for the five categories of lob byers. The mean tests indicated that only the difference in foreign sales percentage was statically significant.
Pairs Analysis, it was used to control for the collinear effects of firm sizes and foreign sales percentages (Pellegrino and Lodhia, 2012). Each firm's foreign sales of percentage was multiplied by total sales revenue to obtain a new variable, capturing both firm size and the magnitude of the potential effects of FAS No.8
In this, I examined that association between debt covenants and management's proportional ownership in their firm and their decisions to lobby in response to FAS No.8
Lobbying behavior and the development of international accounting standards
In the current article there are the things which describe is such as with the help of lobbying in which way the standards of the international accounting are comes under consideration as well as develop and then implement on the firm (Freeman and et.al., 2014). When the company enter as well as operate in international market but make the financial statements on the basis of the accounting standards as well as formats of the home country. In this case, the people and government of the host country not able to understand as well as analyze financial statements and position of it in the market. For this it needs to make the statements by considering standards of the host country which takes huge amount of the time. In addition to this, if the business entity operates in more than two or three countries then it is not possible to frame the financial statements on the basis of all accounting standards. Due to reducing the current position and problems there are lobbying comes under consideration where the law of one accounting method is to be framed and on the basis of that the statements and accounts of the financials are made. At here the international accounting standards such as IFRS as well as different accounting theories like as GAAP etc (Setyorini and Ishak, 2012). framed by the authority parties. At the time of entering in new market the company needs joint with the firm of home country and for which by considering the lobbying international accounting standard 31 is amended during the year 1989 and 1990. In context to this, there are GAAP theory as well as IAS 31 are to be framed which helps to the business entity in order to reduce the constraints and obstacles occurred while combining two firms at the time of entering in the new market.
International Firm Lobbying and ED 8 Operating Segments
In the current case or article there are ED refers to the Exposure Drafts where 8th is considered relating to the operating segments. It is based on the accounting process of the Australian economy where in the January 2006 the international accounting standards board (IASB) issued ED 8 which is Exposure Draft 8 regarded to the segment in terms of operating. In this the accounting system of the country Australia is to be reviewed by using the hypothesis testing which is one of the important tool of statistics (Gaffikin and Aitken, 2014). For determine the framework and legislations which are framed with the help of lobbying that is it will be profitable as well as accepted for the implementation at the workplace the hypothesis testing is to be done. At the current study there are among two kinds of depended variables relation is analyzed which are like as kind of firm and business entity as well as supportive of Exposure Draft 8 for such enterprises.
There are hypothesis statements are framed according to the lobbying and legislations is having variables like as Exposure Draft 8 of the operating segment, abnormal profit, larger and smaller firm, ownership etc. In the current case of the Australian accounting review it can be said that of designing as well as research about the data there are different constituent lobbying position such one hundred and eighty-two are to be assessed. Apart from this, in order to assess as well as calculate abnormal profit in the Australian accounting there are difference of two values is to be consider which are like as return on assets (ROA) and mean of the return on assets (Brosel, Toll and Zimmermann, 2012). It can be said from the present article is that larger kind of business entities were more and higher level of likely with the lobby in the favor of Exposure Draft 8 of the operating