Stakeholder activities in PCAOB audit standard setting: a manual content analysis of comment letter submissions

Xiaoshuai Yang and Joseph H. Zhang

Managerial Auditing Journal, 2025, vol. 41, issue 2, 269-298

Abstract: PurposeThe purpose of this study is to analyze comment letters on Docket 034, which proposes reforms to audit reports, to shed light on the actions of various stakeholder groups in the Public Company Accounting Oversight Board (PCAOB)’s standard-setting process. The study identifies stakeholder groups, examines the timing of their involvement, and evaluates their arguments and lobbying efforts to influence regulatory outcomes.Design/methodology/approachThis paper examines stakeholders’ behaviors in submitting comment letters during the PCAOB’s public consultation period for its rulemaking and their influence on regulatory outcomes. Stakeholder participation in the PCAOB’s rulemaking process is analyzed through a content analysis of 489 comment letters submitted to PCAOB’s Docket 034, using manual content analysis. Stakeholder groups are identified, including accounting professionals, financial statement preparers, financial statement users, regulators and academics. Argument strategies, such as economic, conceptual or a combination of both approaches, are also identified.FindingsThis paper finds that accounting professionals and preparers submit more comment letters than the other stakeholder groups. There is a significant association between stakeholder groups and their lobbying position across issues. Preparers take negative positions on all issues except independence, whereas users support all issues. There is also a significant association between stakeholder groups and their argument strategies, and the significant differences lie in preparers and accounting professionals. Preparers primarily rely on economic arguments, such as costs or time. At the same time, accounting professionals use economic and conceptual arguments (such as violating the FASB conceptual framework) to justify their positions.Originality/valueTo the best of the authors’ knowledge, this is the first study to examine lobbying in the PCAOB’s due process, including all stakeholder groups. The PCAOB’s audit standard-setting process and public consultation via the online docket system promote transparency and the effectiveness of public participation. This study analyzes the nature and impact of stakeholder participation in this due process. Understanding lobbying in an audit standard setting enables the PCAOB and stakeholder groups to work more efficiently on regulatory reforms. This assessment of lobbying efforts in the USA complements and enriches the growing body of literature on lobbying efforts and audit policy reforms across countries. Second, by extending the current literature, this study examines the complexities of lobbying through a detailed content analysis of comment letters. This approach provides insights into the properties of lobbying about stakeholder groups, the scope of lobbying, argument strategies, opinions and consultation periods.

Keywords: Comment letters; Lobbying; Critical audit matters; Audit report reform; PCAOB audit standards (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:majpps:maj-08-2024-4438

DOI: 10.1108/MAJ-08-2024-4438

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