As part of their professionalisation project, independent private standard setters have developed conceptual frameworks to guide their standard setting. Adopting the perspective of legal pluralism, we regard these soft law documents as creating a new living law for the community of standard setters. In this paper, we study how the FASB and the IASB have created this new living law through the discourse on the (re)development of conceptual frameworks. More specifically, we analyse the discourse on the objective of financial reporting from the 1970s to the 2010s. Our material stems from the Boards' due process and includes their proposals, along with about 1300 comment letters submitted by constituents. We find that the FASB and the IASB have used conceptual frameworks to establish their identity as independent experts, distinguishing themselves from the accounting profession with its traditional living law of stewardship, and instead introducing the new living law of decision usefulness. This step met resistance as constituents did not readily accept the standard setters' independence and sought to constrain their future activities. We also find that constituents’ views were influenced by the anticipated role of the conceptual frameworks for standard setters and preparers. Overall, our study shows how standard setters strategically align conceptual frameworks with the due process, while constituents simultaneously use the due process and conceptual frameworks as tools to discipline the standard setters. Our findings extend our understanding of private standard setters, conceptual frameworks, and different legal forms.

The recent revisions of conceptual frameworks (CFs) by the IASB and the FASB included changes to the status of prudence/conservatism, accompanied by a broader debate about the meaning and role of asymmetry in financial accounting theory (FinAT). This paper adopts a historical perspective to identify possible sources of the current controversies by examining how the discourse on asymmetry has developed over time. For this purpose, we trace the conceptualization of asymmetry in FinAT building from the 19th century until 2018, covering contributions to the US FinAT literature and the conceptual reasoning of standard setters (and their constituents) in the United States and at the international level. We identify four distinct constructs of asymmetry (ultra‐, specified, discretionary, and neutral asymmetry) developed in FinAT under the headings of “conservatism” and/or “prudence.” Our analysis reveals that the respective historical circumstances strongly influenced which notion and role of asymmetry were commonly accepted in FinAT, while the arguments underlying the debates were going in circles and were characterized by an increasing level of abstraction over time. We conclude that the controversy about asymmetry is partially due to conceptual ambiguity but also due to different assumptions about the objective of financial reporting and attributes of the preparer, which are indicative of two conflicting paradigms shaping the FinAT discourse on asymmetry. Our findings point to gaps and limitations in the deductive CFs currently employed by the IASB and FASB. Our study highlights future research potential regarding the construction of the preparer in standard setting and analyses of the ways in which deductive CFs (fail to) translate into consistent standards.