THE SEC AND ACCOUNTING: A HISTORICAL PERSPECTIVE

Abstract

Joel Seligman argues that in the absence of regulatory oversight, managerial incentives and notions of efficient markets and competitive positioning have proven to be insufficient in ensuring full disclosure of material financial data. The SEC given express authority to regulate accounting practices, has, during the past fifty years, directly contributed to the standardization of financial statement disclosures. In establishing accounting standards, the SEC has exercised restraint, allowing private organizations such as the FASB to set standards subject to SEC oversight. Although the SEC could be more aggressive in initiating accounting standards (particularly with controversial practices such as pooling versus purchase treatment of acquisitions), as long as users have benefited from full disclosure requirements, the SEC can be perceived as having performed creditably in accounting standard-setting.