MAKING ACCOUNTING KNOWLEDGE: PEERING AT POWER

Academic accounting's gravitation toward the norms of the academy has included the incorporation of peer review practices as the primary means by which scholarship is accepted for publication, and thereby elevated to the official knowledge of the discipline. Surprisingly, the acceptance of peer review has lapsed into a taken-for-granted safeharbor. This paper uses the theoretical template of modern social theory to challenge the making and sanctioning of accounting research. Ideas from Kuhn are rejected in favor of those grounded in Giddens and Foucault in order to focus more clearly upon the consequences of peer review rather than its process characteristics.     

REACTIONS TO REGULATION OF ACCOUNTING FOR GOODWILL

Regulations designed to achieve “uniformity in practice” in Australian firms' reporting of goodwill were first adopted in 1985 with the introduction of AAS18. Because of the requirement to amortise purchased goodwill, a number of firms either did not comply or took evasive actions to mitigate the effects of the standard. This paper documents and explains the pre-regulation cross-sectional variation in accounting practices. Reactions to the set of regulations introduced between 1985 and 1989 are then described and explained through a longitudinal study of accounting policy choice. We develop hypotheses which explain why the goodwill accounting rules reversed relations between the accounting methods adopted by firms and both the earnings effect of compliance and the market value of the firm's goodwill. The results are confirmatory.     

SOCIAL ANALYSES OF ACCOUNTING INSTITUTIONS: ECONOMIC VALUE,ACCOUNTING REPRESENTATION AND THE CONCEPTUAL FRAMEWORK

The paper is a commentary on Bryer's article “A Marxist Critique of the FASB's Conceptual Framework”; the commentary is divided into three main sections. The first section begins by addressing the changing relationships between accounting and economics and, more specifically, the ideas of economic value and accounting representation (often called “representational faithfulness”, see Bryer, p. 582) that underlie Bryer's concerns with the FASB project. The second section considers the role of the FASB conceptual framework project in order to address the different ways that the “impact” of the FASB's Conceptual Framework project upon accounting practices can be considered. Several of the existing studies of this project that consider its purpose in social and political terms are reviewed. This is not to suggest that the FASB's work has had @9pno@2p effects, but rather that its consequences might be thought of in institutional and political terms. In the final section some of the specifics of Bryer's Marxist analysis are addressed. In particular the relationship between Marxian analysis and accounting change is considered.     

Accounting and environmentalism: An exploration of the challenge of gently accounting for accountability,transparency and sustainability

Concern for the natural environment has not occupied a prominent role in accounting scholarship and practice. This paper attempts to redress this omission by investigating the implications for accounting of placing the environment at the centre of the analysis. The paper introduces the principles of this “deep green” position and explores how accounting might articulate them. Whilst there may be no place for what we currently consider to be conventional financial accounting in any “green utopia” the paper does not attempt to operationalise, within a non-green world, certain of the principles of the green position. Emphasis is placed on an accounting's potential for contribution to accountability and transparency in participative democracy, the potential for non-financial accounts of the biosphere and, perhaps most contentiously, the use of current accounting techniques for the operationalisation of an accounting for sustainability.     

ACCOUNTING FOR DERIVATES: BACK TO BASICS

Public accountants have had a hard time deciding how to account for derivatives that are used to hedge risks, which in turn has given derivatives users and others a hard time. For about six years, the Financial Accounting Standards Board (FASB) has struggled with several, often diametrically opposed procedures, ranging from showing all derivatives at “fair” values to deferring realized losses or gains on derivatives until related gains or losses on the hedged transactions have been realized (a practice known as “hedge accounting”). What is behind the FASB's inability to come up with a decisive and authoritative ruling? Although the politics of self-interest has fueled much of the debate, there is more to the problem than politics. The author argues that the underlying cause of the FASB's inability to reach a satisfactory and acceptable solution is not politics, but rather a flawed basic concept of how financial accounting should be done. In this article, the author recommends a procedure for derivatives accounting that was endorsed by the Financial Economists Roundtable in its 1995 “Statement on Accounting Disclosure about Financial Derivative Instruments.” The proposal, in brief, is this: Provided a company can satisfy its auditors that it is using derivatives primarily to hedge an offsetting price exposure, the firm should be given the option to use hedge accounting for that part of its derivatives position that is functioning as a hedge. All other investment or speculative uses of derivatives should be treated like other financial instruments and marked to market or fair value. Such a procedure, the author argues, is far more consistent than the FASB's recent proposals with fundamental principles of accounting that have been developed by accounting practitioners and scholars over several centuries.     

Management Accounting's Diminishing Post-Industrial Relevance: Johnson and Kaplan Revisited

Johnson and Kaplan (1987) claim that management accounting's minimal post 1925 development reduces the relevance of traditional techniques to today's giant corporations. Their argument does not draw on the structural and micro-economic consequences of technological change this century. An alternative explanation of technical stagnation lies in the rising dominance of small service firms. Economic exchanges through the market place have increased relative to the volume of exchanges within large hierarchies. The conventional focus of management accounting research and teaching is problematic because of a fundamental misconception of the location and nature of accounting and other work.     

THE SHARING OF MEANING BETWEEN ACCOUNTING STUDENTS AND MEMBERS OF THE ACCOUNTING PROFESSION

This study examines the extent to which accounting students and practising accountants share the same meanings of fundamental accounting concepts. In doing so, it provides evidence on the suitability of using accounting students as surrogates for accounting practitioners in the study of connotative meaning in accounting. Using the semantic differential technique, the “cognitive structure” (the structure within which meaning is held) as well as the positioning or placement of concepts within the structure were determined for both groups. Each group was found to have a similar cognitive structure (a three dimensional structure comparable to the classic structure found in the psychology literature, Osgood, Suci and Tannenbaum, 1957). However, the placement or positioning of concepts by students within that shared structure was significantly different to that of accounting practitioners.     

THE ORIGINS OF PRUDENCE IN ACCOUNTING

The paper attempts to explain the historical reasons for the dominance of the prudence concept in financial accounting by tracing the history of its meaning up to the end of the nineteenth century. Prudent accounting represented the elaboration by the accounting profession of a distinctive competence@8ithe determination of distributable profit@8iwhich enabled it to appear as the ally and advisor of large investors and management against “speculators”, thereby ensuring an equal return for equal capital. Prudence was crucial to the accounting profession in regulating the social relations of capital     

CONTRADICTIONS AND UNCERTAINTIES: LECTURERS' CONCEPTIONS OF TEACHING INTRODUCTORY ACCOUNTING

This paper draws upon educational research to examine lecturers' conceptions of teaching introductory accounting. A critical review of relevant research indicates that lecturers' conceptions of teaching may be specific to particular disciplinary and educational contexts. Thus the context of introductory accounting may yield its own unique domain of lecturers' conceptions of the objectives, approaches, outcomes and problems of teaching. A model of teaching conceptions (Fox, 1983) is identified as particularly relevant for the analysis of conceptions within a disciplinary context. The phenomenographic research study reported in this paper analyses lecturers' conceptions of teaching introductory accounting within the framework of Fox's model. Results indicate both the relevance of Fox's model as well as some key contradictions and uncertainties within conceptions of the teaching of introductory accounting. Such contradictions and uncertainties have to do with, amongst others, a tension between a professed priority for conceptual understanding, a difficulty in articulating concepts and an emphasis upon technical mastery of topics and problems. The results indicate the need for further research but also provide a conceptual framework through which lecturers might reflect upon the manner in which introductory accounting is, and can be, taught.     

Adding critical accounting voices to migration studies

The field of migration study is continually evolving and frequently controversial, as diverse people cross the globe and as social and economic transformations prevail. Although scholars in many disciplines have actively contributed to migration research, accounting scholars have been less actively engaged, despite migration's use of concepts so closely aligned with accounting: costs, benefits, risk, and control. This paper considers how accounting researchers may contribute to the study of migration, highlighting the potential for critical researchers to re-define terrains of discourse.Migration theories are introduced, illustrating the complexities and interconnectedness of the role of globalisation, poverty, state functioning, and the social sciences. We integrate previous research of accounting, revealing the discipline as part of the language and neoliberal agenda imbued in migration issues, and its participation in co-creating precarious boundaries and myopic concepts defining the debates. We provide a case analysis, specifically illustrating accounting's calculative practices and rhetoric as limiting and obscuring social issues in migration, providing yet another instance of accounting's participation in social controversies.The rhetoric of accounting as merely a technique and the prevailing view of its objectivity are disputed as we reveal accounting's role in creating a simplifying reality, ignoring the complex interdependencies and powerful forces at play in migration arenas. Although much work is to be done in the accounting field to illuminate its role regarding migration issues, we are optimistic that critical researchers can provide expanded ways of thinking and a contribution to the deliberations. The work's originality is contained in its unique framing of migration discourse, revealing the skewed and shadowy assumptions of its traditional discourse, and examining how critical research expands possibilities for promoting social justice in the migration landscape.     

THE IMPACT OF ACCOUNTING RESEARCH ON FINANCE

This paper assesses the impact of accounting research on finance using citational methods and content analysis. The data are 715 articles published in seven finance journals. In contrast to previous research of the influence of finance research on accounting, the results show relatively little impact of accounting research on finance. The limited impact of accounting on finance is principally provided by four accounting journals and a small group of accounting authors. The impact found is often the result of bridging papers, in which either finance articles have accounting authors, or vice versa. These results suggest a substantial disregard of ostensibly pertinent capital-markets accounting research by finance scholars. The reasons for finance’s disregard of this work, whether for reasons of perceived value, quality, or for other reasons, is unclear. However, it is apparent that accounting capital-markets research is not as influential in finance as might be expected.     

BEHIND THE CORPORATE HEDGE: INFORMATION AND THE LIMITS OF "SHAREHOLDER WEALTH MAXIMIZATION"

The article begins by setting out three alternative conceptions of the corporate objective function. Relying on this framework, it shows that legal analyses tend to neglect conflicts between the interests of the corporate entity and the interests of shareholders over the amount of corporate risk-taking. Financial analyses tend to ignore both constraints on managerial discretion imposed by law and a fundamental ambiguity the author identifies in the “shareholder wealth maximization” assumption that underlies such analyses. This ambiguity arises in part from market “frictions”–particularly, the investor uncertainty and heightened price volatility that stem from informational “asymmetry.” Such an information gap between management and outside investors (along with market “irrationality”) can cause material disparities between the actual trading price and the intrinsic value (or what the author calls the “blissful price”) of a company's shares. As a consequence, corporate hedging that maximizes actual share values may not maximize intrinsic values (and vice versa), thus giving rise to a managerial dilemma. Previous analyses have also failed to give adequate consideration to the expectations of shareholders. If, for example, the shareholders of a natural resource company are seeking a relatively “pure play” on that resource–in part because they believe the company's management has no comparative advantage in managing price risks–corporate hedging that increases shareholder wealth may re-duceshareholder welfare. In this sense, the usual “shareholder wealth maximization” directive is not only ambiguous, but also incomplete. These problems stem not only from informational asymmetry, but from other institutional realities (such as the “political” taint associated with reported derivative losses of any kind) that raise the information costs of using derivatives. The article concludes with some suggestions for improving disclosure of corporate risk management “philosophy.” Better disclosure may not only help reduce such information costs, but could also encourage corporations to find–and stick to–their derivatives niche.     

SELF-REFERENTIAL LOBBYING OF THE ACCOUNTING STANDARDS BOARD: THE CASE OF FINANCIAL REPORTING STANDARD NO. 1

This paper employs a Latourian framework to analyse the informal and formal lobbying of the Accounting Standards Board (ASB) over its flagship standard on cash flow statements. The purpose of the analysis is to reveal how the self-referential rhetoric of key lobbyists, such as companies and auditors, was used to “enrol” the ASB into amending its standard in line with the transformative practices of some large companies. The issue of whether net debt should be included on cash flow statements is analysed in detail, as it reveals how a small group of companies were able to enrol the ASB into accepting their translated definition of “cash”. The paper concludes that, given that the ASB essentially relies on voluntary compliance, it responded to the rhetoric of key allies in the standard-setting process in order to maintain its position as an obligatory passage point and so retain support for its project to reform accounting.     

THE THREAT OF ETHICAL ACCOUNTANTS: AN APPLICATION OF FOUCAULT'S CONCEPT OF ETHICS TO ACCOUNTING EDUCATION AND SOME THOUGHTS ON ETHICALLY EDUCATING FOR THE OTHER

There are an increasing number of papers within the accounting literature which are concerned with the relationship between accounting education and the ethics of accountants (see, e.g. Gray, 1994). This paper attempts to contribute to this literature. It draws on the work of Michel Foucault to argue that ethical accountants may pose just as great a threat to society as unethical ones. The paper initially explains Foucault's work on power/knowledge and delineates his novel perspective on how power may operate through an individuals sense of moral identity. It is argued that the way accountancy is taught may predispose accountants to discipline themselves in such a way that they behave in a manner which serves the interests of capitalism and subjugates opposition to it. However, the paper also draws on Foucault's notion of resistance to explain how accounting education might be able to produce students who could represent a threat to this hegemony.     

THE RHETORIC OF TEACHING FINANCIAL ACCOUNTING ON THE CORPORATE WEB: A CRITICAL REVIEW OF CONTENT AND METAPHOR IN IBM'S INTERNET WEBPAGEGUIDE TO UNDERSTANDING FINANCIALS

This paper analyses IBM's teaching of financial accounting via the Internet. The seductive nature of the hyperreal pedagogy in IBM's @9pGuide to Understanding Financials@2p is explored in two stages: first, by means of a technical critique; and second, by examining the @9pGuide's@2p rhetorical features. Particular focus is given to IBM's use of pictorial metaphors as visual rhetoric. We conclude that the curriculum of IBM's web-based financial accounting teaching contains much more than is apparent upon superficial examination. IBM's website paraphernalia constructs beliefs and shapes public discourse. Like all curriculum, IBM's @9pGuide@2p is contestable social construction.     

EXPLORING AN ACCOUNTING PARADIGM: THE CASH ACCOUNT

This paper explores the possibility that practitioners' standards of accounting rationality are partly determined by a “cash account” paradigm, of which the method for preparing accounts from incomplete records is a major exemplar (an important part of the Kuhnian concept). Preparation of accounts from incomplete records forms part of many accountants' early practical experience, and often provides the setting in which elementary bookkeeping and accounting concepts start to become “second nature”. In addition to this, and partly as a result of it, accountants may tend to refer (perhaps not always explicitly) to the so-called “single entry method” when addressing much more complex and intractable problems. Practitioner paradigms get less attention in the literature than research paradigms, and one purpose of this paper is to redress this balance, and to show how articulation of a practitioner paradigm might suggest ways out of some conceptual difficulties     

DETERMINANTS OF ACCOUNTING POLICY CHOICE IN THE AUSTRALIAN PROPERTY INDUSTRY: A PORTFOLIO APPROACH

The objective of this research is to explain accounting policy choice in the Australian property industry by reference to costly contracting theory. This paper makes three departures from the predominant literature. First, instead of focusing on a single policy choice, it focuses on a portfolio of 15 choices. Second, instead of measuring each policy choice dichotomously, it measures the dollar effect of each policy choice. Finally, the research focuses on the impact of policy choices on owners' equity as well as income. The results confirm the importance of compensation arrangements as a determinant of accounting policy choice but fail to provide evidence that debt constraints or political costs are significant determinants of accounting policy choice. These results suggest that including property firms in a more heterogeneous sample may reduce the power of tests on the debt constraints and political costs hypotheses. More generally (when compared to previous research) the results suggest that the determinants of policy choice are likely to be industry specific.     

Reshaping accounting research: Living in the world in which we live

This paper is derived from my participation as a faculty guest of the University of Wollongong's Faculty of Commerce 20th Annual Doctoral Consortium. Consistent with the theme of “paradigm, paradox, and paralysis?”, I argue in this paper that accounting practice and scholarship suffer from paralysis created by the imposition of a neoclassical economic paradigm. Starting from the premise that accounting is foremost a practice, I argue that accounting cannot be limited by any one type of understanding. A human practice like accounting is simply to multi- faceted and complex to be sensibly “modeled” in any one particular way. The “flight from reality” (Shapiro, 2005), that occurred because of the empirical revolution in accounting, should be abandoned in favor of a more problem driven approach to accounting research and practice.     

CHARITY ACCOUNTING: AN EMPIRICAL ANALYSIS OF THE IMPACT OF RECENT CHANGES

Since the early 1980s attempts have been made to reduce the diversity in accounting practice and improve the quality of the published financial statements of charities. Two major events in this process were the publication of the original Statement of Recommended Practice (SORP) 2 in 1988 and its revision in 1995. Changes have been predicated on the dominance of the user-needs model and it is argued that inconsistencies in the financial statements of charities and the adoption of dubious accounting practices make it difficult for users of charity accounts to understand (and therefore use) the information provided. This paper presents the results of an empirical analysis of 151 financial statements of large fund raising charities in England and Wales as a basis for identifying the impact of both the original SORP and the revised SORP. The study's main conclusion is that charity accounting has improved significantly since the 1980s (where improvement is seen in terms of increasing compliance with recommended practice) and it is suggested that the impact of the revised SORP, like the original SORP, is likely to be major although not immediately so.     

WORLDS APART: STUDENTS' EXPERIENCES OF LEARNING INTRODUCTORY ACCOUNTING

This paper argues that, whilst a substantial amount of educational research has been conducted within the introductory accounting curriculum, there is scope for alternative research founded on a particular view of learning, that of social constructivism. In this view, learning is seen to be a response to a student's perception of, or way of experiencing, his or her particular situation rather than the outcome of a particular personality trait or a conditioned biographical response. This argument is supported by the presentation of the findings of a phenomenographic study into students' experiences of learning introductory accounting within the United Kingdom undergraduate curriculum. This qualitative interview-based research reveals two contrasting worlds of accounting: for most students it is a world of detachment and for only a few is it a world of engagement. Drawing on these findings, the paper proposes that an awareness of the nature of the student experience may provide a new way of viewing the introductory accounting curriculum and a new agenda for future research.