Abstract:
There is a lack of consensus on the most appropriate methodological framework for
studies of regulation and due process in order to provide robust outcomes and predictive
potential. In addition to this diversity of approaches, research typically adopts a “singleevent
focus” to an examination of due process and regulatory efficiency. The objective of
this research is to examine the advantages and issues arising when methodologies offering
a multievent
approach are adopted; specifically the utility of game theory methodology
in accounting lobbying research. The applications of game theory in previous studies in
accounting research are summarised (the application to FASB voting rules, auditorclient
interaction, and accounting disclosure choices relevant to wage bargaining); and the
theoretical basis for studies of lobbying behaviour is also reviewed. The standard model
as currently utilised in research on lobbying activities is described; and an alternative
dynamic model proposed. Four core issues arise in the application of such a dynamic
model: identification of the master game and subgames;
gradual or punctuated
equilibrium; agency issues; and reputation effects. It is apparent from the application of
game theory in other areas of accounting research, that evolutionary game theory offers a
more comprehensive and dynamic model of realworld
events, based on multiperiod
or
sequential events. The proposed utility of a game theoretic model in accounting research
on due process and regulation justifies further developments in this area.
