Regulatory networks for accounting and auditing standards: A social network analysis of Canadian and international standard-setting Alan J. Richardson Schulich School of Business, York University, Toronto, Ontario, Canada M3J 1P3 article info abstract Rose and Miller [Rose, N., & Miller, P. (1992). Political power beyond the state: Problemat- ics of government. British Journal of Sociology, 43(2), 173–205] note that governmentality is exercised through ‘‘centers of calculation” embedded in ‘‘networks of rule;” we focus on the ‘‘networks of rule” and use social network analysis to document the linked organiza- tions, both domestic and international, that affect the creation of accounting and auditing standards in Canada. The network is defined as the set of regulatory bodies and other orga- nizations that have the right to appoint (or approve the appointment of) members of another organization’s standard-setting body. The network consists of 61 organizations, sharing 131 interlocks. These organizations are clustered into four groups centered on, respectively, the Canadian Institute of Chartered Accountants, the Canadian Securities Administrators, International Federation of Accountants and the IOSCO/World Bank. The analysis identifies the boundaries of these clusters and the key organizations that maintain the cohesion of the network. The conclusion identifies research opportunities opened by this perspective on accounting and auditing regulation. Ó 2008 Elsevier Ltd. All rights reserved. The governance of complex societies has become a ma- jor concern in many disciplines. There is evidence that the territorial nation state is weakening as a focus of gover- nance as some functions are ceded to international agree- ments and the bodies that implement them, while other functions are devolved to regional levels of government, to voluntary organizations, or to the marketplace. The diminishing regulatory capacity of national governments has been referred to as the ‘‘hollowing out of the state” (e.g. Jessop, 1993; Rhodes, 1994). Others would claim that we are witnessing a change from the ‘‘welfare state” to the ‘‘regulatory state” (Majone, 1997) where the state has moved from direct intervention in economic and social life to the delegation and monitoring of private regulatory re- gimes. This is often referred to as ‘‘meta-regulation” (Grabosky, 1995; Morgan, 2003). The new regulatory envi- ronment may be best visualized as a network of interacting bodies rather than a hierarchy of state power. This meta- phor leads Jessop (2003) to define ‘‘governance” in this context as ‘‘the complex art of steering multiple agencies, institutions, and systems which are both operationally autonomous from one another and structurally coupled through various forms of reciprocal interdependence.” The changing nature of governance processes is also evident within accounting and auditing standard-setting. At the international level, the International Accounting Standards Board (IASB 1 ) and their International Financial Reporting Standards (IFRS) are rapidly gaining acceptance both as a substitute for national standards and as a basis for cross-border capital market listings. At the same time, however, domestic standard-setting processes in many countries are becoming more deeply intertwined with secu- rities regulators and various oversight bodies created to ‘‘watch the watchers” following corporate governance fail- ures at Enron and WorldCom. The result is that accounting and auditing standard-setting is becoming a complex and 0361-3682/$ - see front matter Ó 2008 Elsevier Ltd. All rights reserved. doi:10.1016/j.aos.2008.11.005 E-mail address: ARichardson@schulich.yorku.ca 1 A complete list of acronyms used in the paper is provided as part of Fig. 1. Accounting, Organizations and Society 34 (2009) 571–588 Contents lists available at ScienceDirect Accounting, Organizations and Society journal homepage: www.elsevier.com/locate/aos