The costs and benefits of increased accounting regulation: a case study of Lloyd's of London

While a valuable literature exists on theoretical considerations in cost-benefit analysis (cba) of accounting regulation, and although the regulators themselves acknowledge the need for cost-benefit appraisal of their work, empirical analysis of the costs and benefits of changes in accounting regulation is almost non-existent. This paper attempts such an analysis for a step change in accounting and audit regulation—at Lloyd's between 1982 and 1985. It aims both to advance the cba methodology, and to inform debate about the evolution of the Lloyd's market. While the estimates do not show whether the changes produced an optimal level or form of Lloyd's regulation, they do suggest that, comparing changes, the extra benefits exceeded the extra costs—whether the chosen accounting unit is a private one—Lloyd's Names—or a social one