Doxic sunglasses: A response to “Green accounting and Green Eyeshades: Twenty years later”

This article, in responding to Thornton's (this issue) depiction of how accounting might be extended to incorporate environmental issues, offers a critique of mainstream understandings of the accounting function. Specifically, we argue that Thornton's arguments are developed within doxic, or taken-for-granted, parameters regarding what accounting is and what it can be. Expanding the accounting domain whilst staying within these parameters leads to something more than the mere reproduction of the status quo; it leads to intensified commodification of the biosphere.     

Discussion of “Contagion of accounting methods: evidence from stock option expensing”

Reppenhagen (Rev Account Stud, 2010) investigates how and through which channels contagion, i.e., accounting methods used by related firms, can influence a firm’s accounting choice. My discussion focuses on research design choices and the potential effect of factors other than those investigated in the study.     

Contemporary public sector accounting research – An international comparison of journal papers

This paper provides a broad review of the public sector accounting research in recent years, including that undertaken in the US. An analysis of this research reveals a methodological distinction between research undertaken in the US (using predominately functionalist methodologies, accompanied by positivistic quantitative research methods) and that undertaken in the rest of the world (using interpretive and radical/alternative methodologies, with qualitative research methods). The nature, causes and consequences of this distinction are discussed. The paper concludes with an exhortation for PSAR researchers to explore multiparadigmatic methodologies in future research.     

A nonparametric approach to measuring the sensitivity of an asset’s return to the market

In the market model the return on an asset is modeled as a linear function of the return on a market index with slope parameter beta. The coefficient beta is often used as a measure of the sensitivity of the asset’s return to the market and to measure the component of the variance of the return that is explained by the market. However, both of these interpretations require the additional assumption that the error term in the market model has mean 0 conditional on the return on the market index, an assumption that is often difficult to verify in practice. In this paper, a nonparametric version of the market model is proposed that does not require such an assumption. This nonparametric model replaces the beta coefficient of the market model with a “beta curve” describing the relationship between the asset’s return and that of the market locally near a given value of the market return. The proposed model is applied to stock returns, as well as to returns on mutual funds. Corresponding tests of the market model are given and it is shown that the nonparametric model often provides an improvement over the standard parametric market model.     

“No accounting for these people”: Shell in Ireland and accounting language

Accounting lays claims to be the language of business: a clear, technical, unambiguous means of communication for decisions on investment and economic development. Accounting concepts have increasingly entered mainstream debate on issues affecting society at large. This makes the fairness and effectiveness of accounting as a mode of communication more important for social justice than ever before. In a contentious development, if the discussion is framed primarily in accounting terms, this may disenfranchise those parties to the dispute whose issues are not readily expressed in the common vocabulary of business. Their concerns may become invisible in the debate. If this happens, then accounting has failed as a means of communication, and that failure is non-neutral in that it favours those whose position is best supported by economic arguments.This paper explores this phenomenon using the case of a dispute between Royal Dutch Shell and a local community in Ireland concerning a gas refinery located in an environmentally sensitive area. The issues in conflict are complex and at times intangible. I explore how the limitations of accounting as a language blinded the protagonists to an understanding of each other's concerns, marginalised the concerns of protestors from the public discourse, shifting power from objectors within the local community to those whose primary concern was the economic exploitation of natural resources. I argue that accounting failed as a mode of communication to progress a resolution of the dispute, and that this failure was both unnecessary, and systematic in its support of economic interests.     

Do accounting measurement regimes matter? A discussion of mark-to-market accounting and liquidity pricing

Using a model with banking and insurance sectors, Allen and Carletti show that marking-to-market interacts with liquidity pricing to exacerbate the likelihood of financial contagion between the two sectors. In this discussion, I lay out the main ingredients of their model and explain how they interact with liquidity pricing to generate financial contagion. I then discuss some limitations of their model and propose an interesting extension.     

Commentary on Bryer's “Conscious practices and purposive action: A qualitative study of accounting and social change”

This paper seeks to provide a general and informative commentary on Rose Bryer's paper, “Conscious practices and purposive action: A qualitative study of accounting and social change” (2011), which explores the role of accounting in the specific setting of empresas recuperadas (ERs). ERs (reclaimed enterprises) are businesses that have been brought back into operations as a cooperative by the workers when they were thought to be bankrupt. The commentary presented here focuses primarily on Bryer, but also discusses additional elements that may shed light on the unique phenomenon of ERs. As case studies, ERs provide an ideal context in which to research accounting change and test critical perspectives in accounting. This commentary focuses on the particularities of the socioeconomic environment that became the fertile ground of ERs, while also offering a long-term view of the phenomenon ten years after it was initiated. In particular, it undertakes a comparison between the initial situation and the situation in 2012. The commentary makes two key arguments: first, that accounting is an instrumental technology; and second, that the constructs that existed in 2001 have evolved significantly—and have even become partially obsolete—as diverse management forms emerged in successful ERs. This evolution is analyzed along five dimensions: (1) hierarchical organization; (2) property rights and the concept of profit; (3) community action and its links with access to financial resources; (4) the duality of members and non-members; and (5) the role of accounting reporting and discourse.     

“Rookies to the stock market: A portrait of new shareholders”

This study examines individuals entering the stock market, “rookies.” The study uses unique ownership data, containing investor holdings of all listed Swedish firms over the sample period from 2004 to 2010, to examine rookies’ stock portfolios. In addition, this study explores investor sophistication among rookies, based on individual characteristics and portfolio composition. Although the average shareholder is aging and leaving the stock market, this study shows there are signs of rejuvenation, with rookies entering the stock market. The results show that the majority of rookies hold under-diversified stock portfolios and choose one large firm as their first stock market investment. Rookie characteristics display gender differences, in which the average female rookie has lower income, is older, but holds a larger stock portfolio than her male counterpart.     

Implications of the “momentum” theory of digitalization in accounting: Evidence from Ash Cloud

We aim to demystify digitalization in accounting (DIA) based on the case study of Ash Cloud, a digital factory in Shenzhen, China. From the perspective of dynamic capabilities, we develop the “momentum” theory of DIA to illustrate that firm and executive characteristics drive digital transformation and organizational capabilities. Ash Cloud’s CEO values and cultivates an organizational culture of transparency and openness, while the firm is characterized by cost pressures. Organizational capabilities shape digitalization in business processes and different approaches to DIA. Our findings suggest that the core competence of Ash Cloud is its capability for systems integration, which includes knowledge of redesign, reconfiguration and redefinition. Ash Cloud stands out because of its knowledge extending beyond the firm’s boundaries.     

Forrest gump—Accountant: A study of accounting in the motion picture industry

This case is designed to be used in a junior/senior level cost/managerial course or an MBA level managerial course. It provides instructors with the ability to address a wide variety of issues while demonstrating the interrelationships in the various sub-areas of financial, managerial and tax accounting. The entertainment industry is used as a backdrop where the instructor may cover any or all of the following topics: cost terminology, cost behavior, C-V-P analysis, compensation, control, overhead allocation, ethics, revenue recognition, tax recognition, matching, and valuation issues. The case can be used for individual assignments, but it is particularly well suited for a group assignment.     

On the prediction of financial distress in developed and emerging markets: Does the choice of accounting and market information matter? A comparison of UK and Indian Firms

We examine differences in price delay for a sample of real estate investment trust (REIT) and non-REIT matched pairs. Results suggest an economically and statistically higher level of price delay for REIT securities, which implies heightened frictions that increase the time needed for new information to be impounded into the prices of REIT shares. The primary drivers for the observed delay differential include differences in idiosyncratic volatility, market risk, and the number of days traded. Within-REIT determinants of delay confirm findings for the pooled sample of matched pairs. Importantly, we infer find that REIT investors are not compensated for restricted information flow, as excess returns are unrelated to the price delay.     

Paradigms,theory and management accounting practice: A comment on Parker (forthcoming) “Qualitative management accounting research: Assessing deliverables and relevance”

Parker (forthcoming) provides a valuable discussion of the state of, and prospects for, qualitative research in management accounting. This comment amplifies three issues raised in Parker's (forthcoming) review: the multi-paradigmatic nature of qualitative research and the potential that this offers for the expanded use of qualitative methods in accounting research; the role of theory in qualitative management accounting research and the need for such research to contribute to the literatures from which it draws rather than simply being a consumer of theory; and the potential for qualitative management accounting research to inform management accounting policy and practice when research gains rigor through paradigmatic bracketing.     

Sensitivity of willingness to pay to the magnitude of risk reduction: a Taiwan­United States comparison

Estimates of willingness to pay (WTP) for health, environmental, and other goods obtained using contingent valuation (CV) have been criticized as inadequately sensitive to the scope or magnitude of the good. We investigate the sensitivity of WTP to variation in the magnitude of reductions in health risk using survey data collected in two countries, Taiwan and the United States, that differ dramatically with respect to economic development and cultural background. WTP is elicited for reductions in acute risks associated with food poisoning and blood transfusion, and for reductions in the chronic risk of pneumonia at advanced ages. Results are similar in the two countries and provide little evidence that CV-based estimates are sufficiently sensitive to the magnitude of the risk reduction. Inadequate sensitivity of estimated WTP to the magnitude of risk reduction suggests that improved methods are required for estimating consumers' rates of substitution between health risk and other goods.     

The power of language in legitimating public-sector reforms: When politicians “talk” accounting

Language can play an essential role in shaping how accounting reforms and the information around them are communicated and legitimated. However, scant consideration has been given to study what happens when politicians are the decision makers of accounting changes. This paper explores the political use of language by investigating how the Members of Parliament discuss about public-sector accounting reforms, and deploy different rhetorical strategies to legitimate or de-legitimate them. Through the analysis of Italian parliamentary debates in the 1990s and 2000s, this study highlights how the use of language can facilitate the exercise of power by deploying arguments rhetorically dominated by authorisation and moralisation strategies. The rhetorical arguments brought forward allow politicians to disguise their loss of power in favour of the European Union, depicting their actions and proposals as necessary and/or in favour of the public interest.     

Educating digital natives for the future: accounting educators’ evaluation of the accounting curriculum

The global digital revolution has irrevocably transformed societies and industries. The accounting profession is predicted to experience a significant change in the future, due to technological developments. Practices will be automated and related positions obsolete, thus accounting graduates need to be educated for new and different tasks and positions. The current study focussed on these expected changes and how accounting profession, practice and, consequently, education will be affected and adjusted to these new technologies in an evaluation approach. A qualitative methodology was employed, investigating accounting educators’ perceptions of these developments. Semi-structured interview data and online accessible empirical data, such as podcasts, were analysed in two coding cycles. The findings illustrate that while significant changes are expected, participants’ opinions vary regarding the necessity of adjusting the accounting curriculum. Supportive changes include amending respective courses to emphasise classic skills, such as problem-solving, and contemporary skills, such as new technologies, to illustrate developments practically.     

Theme: Whole of government accounting— international trends

This article reconstructs the literature on corporate turnaround in terms of its recurring features. It then tests these against the experience of four very different cases of the turnaround or attempted turnaround of public and non-profit organizations. It concludes that while some concepts from the corporate literature usefully highlight important aspects, other critical complicating features of what is needed to achieve a turnaround in public and non-profit contexts would be overlooked or poorly treated if the situation were considered simply in these terms. These complicating features deserve the attention both of practitioners and researchers.     

Beyond accounting and back: An empirical examination of the relative relevance of earnings and “other” information

Ohlson (1995) models firm value as a function of book value, earnings, and analysts' earnings forecasts which capture “other” information not yet reflected in the financial statements. Within this framework, stock returns reflect information from earnings and forecasts, each of which is different in terms of reliability and timeliness. For the period 1984–2012, this paper examines time trends and the influence of aggregate market conditions on the relative relevance of earnings and forecasts. In this context, relative relevance is defined as the incremental explanatory power of earnings or forecasts, relative to their combined explanatory power with respect to the cross-section of stock returns. This inquiry is motivated by anecdotal evidence and recent research, which suggests that aggregate market conditions influence the usefulness of accounting information for investors. The findings show that while the relative relevance of earnings has remained stable, the relative relevance of forecasts has increased over time. I also find that the relative relevance of earnings is higher in bad years, i.e. years with low market returns or elevated market uncertainty. Overall, the results reported in this study suggest that despite the increase in the relevance of timely “other” information, investors tend to rely more on reliable accounting information during bad years.