Measuring The Evolution Of Generally Accepted Accounting Principles

Abstract

Generally Accepted Accounting Principles (GAAP) guide financial reporting. Although numerous opinions and standards have been issued over the past 45 years, there is little quantitative evidence concerning the degree of change in GAAP. The purpose of this study is to generate a quantitative understanding of the degree of evolution in GAAP since Accounting Research Bulletin (ARB) 43. The results indicate that significant changes are occurring in GAAP. Less than 50% of the GAPP issued in the 1950s and in the 1960s remains in effect today. Furthermore, significant changes have occurred in GAAP issued within just the past 20 years. The primary implication is that GAPP is continually being reviewed and revised in response to investors and creditors changing information needs.