| Many of the costs and benefits of standardizing accounting, which reduces the discretion of accountants and managers, are impossible to quantify. As a consequence, arriving at an efficient level of standardization in accounting is impossible using traditional cost/benefit analysis. In this paper, I study the level of accounting standardization in two contexts. First, taking a historical perspective, I show that the output of accounting standard-setters has increased fourfold over the last 50 years. I then examine how the increased standard-setter output was received by the accounting profession. Using data collected from editions of a well known accounting reference manual, the Accountants' Handbook, published between 1923 and 2007, I find a negative temporal association between increasing standardization and proxies for the quality of the accounting discourse, consistent with the predictions in Baxter (1962). I then examine the level of accounting standardization in the context of a large sample of occupations in the United States. I develop and estimate a model of standardization in occupations. Using this model, I estimate a benchmark of the "expected" level of standardization in accounting occupations given their characteristics. I find that the accounting occupation most involved with financial reporting is far more standardized than the model predicts, consistent with "standards overload."... |
