Received: 29-08-2013 Accepted: 12-05-2014 Political Consensus through Setting International Accounting Standards: the Case of IAS22

Harmonization of accounting financial reporting standards is defined as a way of decreasing the diversity between local accounting standards that facilitate cross-national capital flows and stimulate economic growth. Investigation into the accounting standard-setting strategies can be related practically to the study of harmonization, since the ability to dominate the International Accounting Standard Board (IASB) can create an obstacle in harmonization of accounting standards and subsequently the flow of capital worldwide. The study aims to reveal that a valid and effective accounting standard, which formerly issued, may reflect the needs and expectation of few interested powerful bodies due to the neutral comments and dearth of lobbyists in the process of setting the standard. Therefore the research investigates the working of the IASB, by exploring the standard setting process specifically in relation to the standard on business combinations which has been on the agenda over an extended period of time. The written submissions in response to 14 issues, proposed in Exposure Draft 61 (1997), to revise IAS 22 “Business Combination ” are analyzed to understand whether various comments from different interested parties deliberately affect IASB’s decision. The situations in which any of the lobbyists (e.g. Anglo-American bodies) may exert influence are discussed. The results confirm an overall support to th