The Standard-Setters' Toolkit: Can Principles Prevail over Bright Lines?
Abstract We study lease accounting in an international panel data set to examine how accounting outcomes vary with two features of accounting standards: the emphasis on using professional judgement to apply principles, and the presence or absence of bright-line tests. We study four countries—Australia, Canada, the UK, and the US—and companies in two lease-intensive industries—retail and transportation. Our primary study period spans the time when Australia and the UK switched from domestic to international accounting standards, and in one test, we also consider Canada’s transition to international standards. We find that neither an explicit requirement to apply a principle nor omitting bright-line tests materially increases the use of capital lease treatment among these firms. Overall, we conclude that this financial reporting outcome is relatively insensitive to these standard-setting tools.
How can good educational practice move be~ond pockets of excellence to reach a much greater proportion of students and educators? While many children and young adults in school districts and communities around the countrt have long benefited from the tremendous accomplishments of successful teachers, schools, and programs, replicating this success on a larger scale has proven to be a diJficult and vexing issue. In this article, Richard Elmore addresses this problem by anal’tzing the role of school organ izat ion and incentive structures in thwarting large-scale adoption of in novative practices close to the “core” of educational practice. Elm ore then reviews evidence Jrom two attempts cit large-scale school reform in the past — the progressive movement and the