Abstract ABSTRACT: Several authors have examined the issue of choice among financial reporting standards and principles using the framework of rational choice theory. Their results have been almost uniformly pessimistic in terms of the possibilities for favorable resolution of the issue. Upon further analysis, these results are revealed to be an artifact of the way in which the issue is initially formulated. Several possible methods of reformulating this issue within the rational choice framework are proposed and explored in this paper. The results here support a much more optimistic conclusion and suggest numerous avenues of further research which could provide considerable insight to the conditions under which optimal accounting principles are possible.
Barry E. Cushing (Fri,) studied this question.