Accounting, Truth and Communication: The Case of a Bank Failure

There have been many papers admonishing accounting researchers to abandon traditional approaches to research and to embrace a particular social theory or philosophy, such as those of Braverman, Foucault or Habermas. Few empirical studies, however followed this advice. This paper employs Habermas' theory of communicative action and, more specifically, his notion of the four validity claims implicit in any speech act in an empirical analysis of the financial reporting and auditing of the Canadian Commercial Bank. Any speech act involves a double structure of speech which combines the communication of propositional content with that of interpersonal relations. Consequently, any analysis of financial reporting and auditing must necessarily involve the double structure of speech and, therefore, the perspective of the four validity claims: comprehensibility, truth, truthfulness and rightness. This paper provides an analysis of financial reporting and auditing of the Canadian Commercial Bank. It shows that the four validity claims were violated. This analysis of one case is then used to make observations about public accounting in general.