How can we measure the costs and benefits of changes in financial reporting standards?

This paper first describes the components of a conventional cost‐benefit analysis, a decision tool that is widely used to evaluate large public‐sector projects such as dams. It then compares a conventional cost‐benefit analysis to the approaches used by financial reporting standard‐setters and others to evaluate the costs and benefits of changes in authoritative accounting guidance. The last portion of the paper describes how accounting research provides analyses of effects of changes in accounting standards and describes how these effects‐analyses differ from, and are similar to, a conventional cost‐benefit analysis.