Accounting Policy Overview

Principles

Definition

Accounting policy is an academic concept and research field that investigates the selection, application, and impact of the specific principles, bases, conventions, rules, and practices used by entities in preparing financial statements. This domain examines how management choices within established accounting frameworks influence the quality, comparability, and transparency of financial reporting, and their implications for user decision-making. Key areas of study include the determinants of policy choice, the characteristics of different policies, and the economic consequences arising from their application.

Ontological type

Economic Consequences

Determinants of Choice

Regulatory Frameworks

Key developments

Key Figures

Earnings Management Policy era

Watts and Zimmerman (1986) formalized Positive Accounting Theory, arguing that managerial incentives and enforcement shape accounting choices and policy outcomes. William H. Healy (1985) demonstrated how compensation schemes can induce discretionary accruals to influence reported earnings. Dechow, Sloan, and Sweeney (1995) advanced the empirical detection of earnings management by decomposing accruals and linking accrual quality to governance and disclosure. Basu (1997) introduced the conservatism perspective on earnings, while Healy and Palepu (1993) integrated governance and disclosure concerns to show how boards, auditors, and regulation suppress manipulation and shape earnings quality.

CSR and Accounting Policy era

George Serafeim [1] is associated with Harvard University [3] and Cardiff University [4] during the CSR and accounting policy era. His key contributions in this era include documenting causal links between CSR initiatives and changes in access to finance and disclosure quality, notably through the 2013 paper Corporate social responsibility and access to finance [6]. Ioannis Ioannou [2] is affiliated with Cardiff University [4] and Boston College [5] during the same period. His work emphasizes causal inference, cross-country comparisons, and governance mechanisms translating CSR commitments into measurable accounting outcomes, as exemplified by the 2013 paper Corporate social responsibility and access to finance [6].

ESG Disclosure Mandates era

Amina Buallay[1] operates within ESG disclosure regimes of 2018–2024, with connections to Brunel University of London[2] and Ahlia University[3]. Her key contribution is exemplified by Is sustainability reporting (ESG) associated with performance? Evidence from the European banking sector[4], which analyzes whether ESG reporting relates to performance in European banks and clarifies why mandated disclosure matters for price signals and risk assessment in this era. Amina Buallay[1] further emphasizes how governance, enforcement, and investor demand shape the transformation of de jure ESG requirements into de facto transparency in corporate reporting. Buallay[1] thereby contributes to positioning sustainability transparency as a core input to capital allocation and long‑term risk management under ESG disclosure mandates.