Constructing Accounting as a Public Policy Issue: The Framing of Fair Value Accounting during the Global Financial Crisis of 2007–09

We analyze the mechanisms and circumstances under which accounting topics emerge as public policy issues in the political domain. Based on the theoretical concept of framing, we understand accounting debates - in particular those that elevate the discourse to the level of public policy makers - as frame contests, wherein different frames, that is, different versions of a perceived reality, compete for policy makers’ acceptance. Based on a comprehensive review of the observable public debate on fair value accounting during the global financial crisis of 2007–09, we analyze the statements of various actors for factors that affect a frame’s persuasiveness: dominance, timing, relevance, and credibility. Whereas a balanced discussion about the existence of an accounting problem characterized the initial accounting debate, economic events caused an asymmetry in the frames’ empirical credibility and relevance to the benefit of opponents of fair value accounting. This asymmetry shifted the persuasiveness of these frames, which ultimately facilitated the emergence of fair value accounting as a public policy issue. A focus on less central and less empirically credible arguments combined with a lack of support from other actors and late reactions further contributed to critical questioning of the standard-setters’ regulatory legitimacy.