39
about the future character of international standards. In 2000, the same year that the
European Commission proposed complete standardization, not merely harmonization, the
SEC issued a concept release asking for comments on the application of IAS in the US.
115
In 2001, the SEC Chief Accountant endorsed the global convergence of accounting
standards.
The above sequence of events shows how movements toward standardization in
the EU transformed the calculations of US regulators even before the formal regulation
was passed in 2002. The new regulation not only mandated that all listed companies
apply IAS by 2005 but also set up an elaborate endorsement mechanism designed in part
to counter the SEC’s influence over the IASCF board members and IASB standard
setters.
116
Two months after the regulation’s passage, the signing of the Norwalk
Agreement illustrated the vastly changed US position.
The key variable behind the altered stance was EU progress toward
standardization. It improved Europe’s bargaining power vis a vis the US, in the sense
that both can now do equal harm to one another’s firms. The verdict is still out as to
whether the EU’s endorsement mechanisms are sufficient for influencing the IASB and
overcoming its “Anglo-American” bias in the long run.
117
However, perceptions, not
reality, of what might emerge in Europe have fuelled the regulatory competition from the
start.
115
Release Nos. 33-7801, 34-42430; International Series Release No. 1215; File No. S7-04-00 at
http://www.sec.gov/rules/concept/s70400.shtml.
116
van Hulle 2004.
117
Barber 2004; Kerrison 2004; Lex Column 2004; Norris 2004b
Convention