The paper "The Economic, Institutional Theories of Regulation" is an outstanding example of a finance and accounting assignment. Several regulation theorists hold an argument that institutional arrangement, structure and social processes have an ability to shape regulation, therefore, calling for understanding of these factors. The drivers of regulation go beyond individual preferences to include social and organizational setting from regulation emerges. The principals in these institutions are elected officials. This theory mainly draws from agency theory. Similar to the agency theory, the institutional theory is characteristic of information asymmetry where agents are favored.
As a result, elected officials must formulate and have in place procedures that ensure informational disadvantages faced by politicians are reduced (Gaffikin 2005). Secondly, these procedures ensure that dependable and sufficient administrators have been involved in designing the regulations. The main emphasis of institutional theory of regulation is that actors are viewed as shaped in knowledge, action, and preference for social environments and organizational rule; rather than being viewed as individuals. It also emphasizes on institutional design as shaped by characteristics of the political setting. The politic of Ideas Theory of Regulation Politics of ideas emphasizes on the role of ideas in steering regulatory developments.
The politics of ideas arose in the aftermath of economic deregulation in several visible infrastructural industries. The argument posed by the proponents of this theory is that deregulation, or for that matter regulation, requires coordination by influential political institutions. Every involved political institution is very protective of its interests, and each one of them possesses the capacity to block policy initiatives by competing institutions. Without simultaneous cooperation, gridlock occurs, and the status quo remains unchanged.
In this theory, intellectual ideas are the coordinating forces most evident in regulatory decision making, particularly in recent deregulatory initiatives.
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Gaffikin, M. 2005. Regulation as Accounting Theory. Research Online, Working Paper Series.
Gaffikin, M. 2008. “Accounting research and theory” in Accounting Theory: Research, regulation and accounting practice. Frenchs Forest: Pearson Education.
Rahman, A. 2013. The Australian Accounting Standards Review Board (RLE Accounting): The Establishment of its Participative Review Process. Oxon: Routledge.
Riahi-Belkaoui, A. 2005. Accounting Theory. Mason: Cengage Learning.