Constitutional changes in the FASB: A note

Timothy Sutton

Public Choice, 1988, vol. 59, issue 1, 89-94

Abstract: Notwithstanding the normative basis of BT's theory of constitutions, this note shows that it has descriptive power. A key change in the constitution of the U.S. accounting standard-setting body was examined. It was found that an exogenous shock to an organization in apparent equilibrium led to an offsetting change in constitutional variables, in the manner BT portray in their theory. The note extends BT's theory by identifying an additional constitutional variable, namely, qualifications for membership of an assembly. Consideration of this variable requires the individual to trade external against decisionmaking costs in the same way he balances them when considering other constitutional variables. Copyright Kluwer Academic Publishers 1988

Date: 1988
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DOI: 10.1007/BF00119452

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