The paper "Economic Interest Perspective on Accounting Regulation" is a good example of a finance and accounting coursework. It is important to initially understand what the Economic Interest Theory and Regulation involves so as to understand the private interest theory involves. This theory advocates that the regulations are a set of policies that are driven by the forces of demand and supply. In this case, the government is on the supply side whereas the interest groups are on the demand side. The, therefore, suggests that regulations are established by the industry and the main objective for the establishment of the regulations is to create advantages to the concerned industry. The Economic Private and group theories, stress on the fact that regulations serve the interests of single or several groups which at times include the regulator.
This private interest group is founded on some assumptions. The assumption is that all the actors that are involved, are rational and self-interested maximizers of utility and this is likely to influence the course of their action, relative to the content and form of regulation. This is different from the public interest theories which are mainly based on the assumptions that the regulator tends to formulate rules and regulations for the sake of the public interest.
The regulator, in this case, is seen as an expert operating in a not so interesting way to benefit society. The private interest group theory assumes that in a market, different entities have the same interests. These similar interests are what will make various entities join together and force the government to formulate certain legislations that will enable them to attain economic benefits.
In a virtual competitive market, there exists conflict between different groups and therefore what is beneficial in one group will probably be a cost to the other group. A number of factors can be used to determine the behaviour of various agents on the response of regulatory action, this can be economic, capture or special interest. For example, the capture theory has been used in the accounting literature to determine how accounting as a profession especially for the large accounting firms interact with various regulatory institutions and capture them to ensure the rules formulated in the latter favour them and their interests.
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