MORE OLD W[H]INE IN A NEW BOTTLE?

This rejoinder seeks to address the criticisms expressed in Jones & Aiken's (J&A's) response to Walker (1996). It also re-iterates the limitations of employing a Diceyan-derived model of Victorian legislation in the realm of accounting and auditing. It is contended that the importation into accounting history of the debate aboutlaissez-faireand collectivism is at variance with the recent historical scholarship which J&A seem reluctant to acknowledge. The paper supports the view that the ideological influences on accounting and auditing regulation during the 19th century were often complex and are not reducible to purelylaissez-faireand collectivist explanations. It is argued that legislative outputs relating to companies should also be understood in the context of the character of public policy making in Victorian Britain, and the distribution of power among interested groups.     

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.     

Americanism and financial accounting theory – Part 1: Was America born capitalist?

This paper (Part 1), and two related papers (Part 2: The ‘modern business enterprise’, America's transition to capitalism, and the genesis of management accounting; and Part 3: Adam Smith, the rise and fall of socialism, and Irving Fisher's theory of accounting), explore historical links between American ideology and Irving Fisher's theory of accounting. They explain Fisher's theory as the product of America's exceptional transition to capitalism and the ideological consequences. Part 1 uses Marx's theories of the transition in England, of colonisation, and of ideology, to construct an accounting history model of America's transition to capitalism that identifies the dominant social relations of production and calculative mentalities, and uses them to predict the accounting signatures and political ideologies we should observe if the theories are correct. Parts 1 and 2 test the model. Part 3 explores the ideological consequences of America's transition, for America and financial accounting. Scholars generally assume that America was ‘born capitalist’; historians argue it became capitalist sometime from the late 18th to early 19th centuries. The model, however, identifies early farmers as ‘simple commodity producers’ who, it predicts, kept only single entry accounts of debt, and had a ‘producer’ ideology of ‘equality’ and ‘freedom’. It identifies planters and manufacturers as ‘semi-capitalists’ – part merchant capitalist and part simple commodity producer – who it predicts calculated ‘profit’ as consumable surplus, pursued the ‘simple rate of profit’, controlled only prime costs, and had an ideology of ‘individualism’ that combined the producers’ ideology with the merchants’ ‘laissez-faire’. Part 1 re-examines evidence from accounts to around the mid-19th century, which confirms that farmers were not capitalists and that even the most advanced merchants, manufacturers and planters were semi-capitalists. Part 2 searches for capitalists in the second half of the 19th century. It re-examines evidence from the accounts of the Boston Associates who historians have seen as ‘proto-industrial capitalists’; from the railroads heralded by Chandler as the beginning of ‘managerial capitalism’; and from ‘entrepreneurial capitalists’ like Andrew Carnegie who created the large corporations that conquered America from the 1880s. Their financial accounts and cost management systems reveal the same semi-capitalist mentality found in the early 19th century. Re-examination of the ‘costing renaissance’ in the 1890s and evidence from the DuPont Powder Company and General Motors from 1900 to 1920, suggests that only from around 1900, after escalating conflict between ‘capital and labour’, did the capitalist mentality appear in new management accounting systems focused on ‘return on investment’. Part 3 shows that the accounting evidence closely correlates with the history of American political ideology. It argues that Adam Smith's Wealth of Nations dominated American politics until the late 19th century because it theorised a nation of simple commodity producers and semi-capitalists. It explains the delay in America's transition compared to Britain's, and the decline in the popularity of laissez-faire from the 1880s, as consequences of this exceptional starting point. ‘Big business’ capitalism created an ideological problem for America's ruling elite, particularly the threat of socialism from around 1900 to 1920. Part 3 argues that Fisher's neoclassical theory of ‘capital’ and ‘income’, designed as a critique of Marx, responded to this problem and played an important role in undermining middle class support for socialism. Fisher said he based his theory on accounting practice, particularly double entry bookkeeping, but Part 3 shows he did not use or understand it, which divorced his accounting from reality. American history's legacy to the world, the papers therefore conclude, is a pathological theory of financial accounting.     

Asset price prediction using seasonal decomposition

We propose a new forecasting procedure for asset prices using seasonal decomposition methods (SD hereafter), e.g., SABL and X-11. Such SD's are based on moving average methods, and they are thus easy to use and are capable of computing the seasonal pattern that changes over time. A SD typically decomposes a series intoT (trend),S (seasonal component), andR (residual or sometimes referred to as the irregular component). We use an ARIMA model onR to obtain its forecast. TheS component is forecasted by an extrapolation taking into account its changing pattern within the sample period. We propose to set up some scenarios on theT component by examining its possibly nonlinear and nonstationary behavior, and in the paper we suggest one possible way for this. Suppose that the forecasting horizon is relatively short compared toT's several cycles just before the end of the sample. Then we may safely extrapolateT linearly into the forecasting period. LinearizingT in such a case, makes sense. As to the slope of the linear line, we suggest the average rate of change of the most recent upward phase of a cycle to be used if we needed an optimistic scenario. Obviously, that of the downward phase may be used for constructing a pessimistic scenario, and that of one entire cycle is suitable for ‘average’ scenario. Once the forecasted values of the three components are obtained, we may put them back to make predictions on the original series based upon various different scenarios. In addition to proposing a new prediction method, we looked into the following issues, among others, in the paper: (1) on what sort of asset prices would our forecasting method work well? (2) Any significant differences if we used X-11 instead of SABL?     

Fair Value Accounting and Stewardship*

Current standards define fair value as the market price at which an asset could be sold or a liability could be settled in the normal course of business. Setting aside measurement issues, assessing the relevance of exit values has intensified in recent years as fair value becomes a pervasive component of accounting regulation. The current debate about accounting measurement is framed in terms of making a choice between fair value and historical cost. In this article I argue that this is not a correct framing of the issues; knowledge of fair value alone cannot help investors to evaluate stewardship, because they would not know how much resources the management had sacrificed to obtain that fair value. To properly evaluate stewardship, investors need both types of information, historical cost and fair value.Using this information, a rate‐of‐return‐like index of stewardship quality is proposed. This commentary concludes with a statement about three significant drawbacks of relying solely on fair value accounting.     

Reprint of “Discourses of transdisciplinarity: Looking back to the future”

The current ascendancy of transdisciplinarity (TD) is marked by an exponential growth of publications, a widening array of contexts, and increased interest across academic, public and private sectors. This investigation traces historical trends, rhetorical claims, and social formations that have shaped three major discourses of TD: transcendence, problem solving, and transgression. In doing so, it also takes account of developments that have emerged or gained traction since the early 21st century when a 2004 issue of Futures on the same topic was being written.The epistemological problem at the heart of the discourse of transcendence is the idea of unity, traced in the West to ancient Greece. The emergence of transdisciplinarity was not a complete departure from this historical quest, but it signalled the need for new syntheses at a time of growing fragmentation of knowledge and culture. New synthetic frameworks emerged, including general systems, post/structuralism, feminist theory, and sustainability. New organizations also formed to advance conceptual frameworks aimed at transcending the narrowness of disciplinary worldviews and interdisciplinary combinations of approaches that did not supplant the status quo of academic structure and classification.The discourse of problem solving is not new. It was fundamental to conceptions of interdisciplinarity in the first half of the 20th century. Heightened pressure to solve problems of society, though, fostered growing alignment of TD with solving complex problems as well as trans-sector participation of stakeholders in society and team-based science. The discourse of transgression was forged in critique of the existing system of knowledge and education. TD became aligned with imperatives of cultural critique, socio-political movements, and conceptions of post-normal science and wicked problems that break free of reductionist and mechanistic approaches. It also became a recognized premise in interdisciplinary fields, including cultural studies, women's and gender studies, urban studies, and environmental studies. And, calls for TD arrived at a moment of wider crisis in the privileging of dominant forms of knowledge, human rights accountability, and democratic participation.Even with distinct patterns of definition, though, discourses are not air-tight categories. Transcendence was initially an epistemological project, but the claim of transcendence overlaps increasingly with problem solving. The imperatives of transgression also cut across the discourses of transcendence and problem solving. Broadly speaking, though, emphasis is shifting from traditional epistemology to problem solving, from the pre-given to the emergent, and from universality to hybridity and contextuality.     

Early detection,warnings, weak signals and seeds of change: A turbulent domain of futures studies

This paper marks a milestone in a six year research cycle on weak signal analysis and early detection issues in futures studies. While providing a broad view and discussing a variety of contributions on this topic, the aim of this article is to offer a more constructivist approach to early detection studies than has been typically the case so far. The article starts by positioning the underlying problem of weak signals within the broader field of futures studies. The second section examines the Ansoffian tradition, first on the basis of Ansoff's own contributions, then through key enhancements offered by scholars working in the same perspective. The third section develops the arguments for a constructivist critique of the Ansoffian tradition as a way to renew and enrich scientific debate. The fourth and final section presents the main open issues where research, case studies, methods and applications still need to make significant progress in the vast domain of weak signal analysis and early detection.

“I have never doubted the truth of signs, Adso; they are the only thing man has with which to orient himself in the world. What I did not understand was the relation among signs.” William of Baskerville, in the Name of the Rose¹

     

Accounting and the birth of the notion of capitalism

The purpose of this paper is to cast a new light on the post-Sombartian debate. As we know, Sombart (Sombart W. Der moderne Kapitalismus. München, Leipzig: Duncker and Humbolt, 1916) thought that the invention of double-entry bookkeeping was essential to the birth of capitalism. Max Weber developed the same theme, but to a lesser extent. Accounting scholars have debated the idea quite extensively during the 20th century. All these previous works have in common the fact that they address the historical question by comparing accounting practices to business practices, some of which are interpreted as capitalist. In this paper, my aim is not so much to understand the birth of capitalism, but to contribute to some understanding of the birth of the concept of capitalism itself. The concept was forged during the 19th century. At that time, capitalism and a certain kind of double-entry bookkeeping practice that was able to highlight the circuit of capital were inextricably linked. It might be suggested that this historical situation greatly helped the scholars of the period to conceptualise what they called capitalism, and it is easy to show that the notion of capitalism itself is rooted in accounting notions. I will thus argue that the history of how the concept of capitalism was invented is an example of the influence of accounting ideas on economic and sociological thinking.     

Further critical reflections on a contribution to the methodological issues debate in accounting

Laughlin's (1995) contribution to the methodological issues debate in accounting (Laughlin R. Empirical research in accounting: alternative approaches and a case for “middle-range” thinking. Accounting, Auditing & Accountability Journal 1995;8(1):53–87.) is often cited. Here, we assess and clarify the contribution, including in reflecting upon some critical reception. We initially provide an overview of Laughlin (1995), enhancing appreciation of this by relating it to prior work. We then appraise some previous critical assessments of Laughlin (1995) and take into consideration Laughlin's interaction therewith. We go on to elaborate our own critical appreciation. We conclude that Laughlin (1995) substantively provides for a number of insights that continue to be positive for the development of research into accounting and related practices. Developing our analysis, we indicate the continuing strengths of a German critical theoretical orientation in researching and developing theoretical appreciation of accounting and related practices today.     

A skeptical appraisal of asset pricing tests

It has become standard practice in the cross-sectional asset pricing literature to evaluate models based on how well they explain average returns on size-B/M portfolios, something many models seem to do remarkably well. In this paper, we review and critique the empirical methods used in the literature. We argue that asset pricing tests are often highly misleading, in the sense that apparently strong explanatory power (high cross-sectional R²s and small pricing errors) can provide quite weak support for a model. We offer a number of suggestions for improving empirical tests and evidence that several proposed models do not work as well as originally advertised.     

Are Employee Selection and Incentive Contracts Complements or Substitutes?

There is a debate in the literature as to whether employee selection is a substitute or complement to incentive contracting. We argue that incentive contracts and selection can be both complements and substitutes conditional on the contracting difficulty faced by the firm. We examine these control choices in a setting where contracting difficulties arise due to the firm's choice of strategy and from the volatility created by the firm's external environment. We select a firm's commitment to organizational learning (OL) as our strategic choice variable as this provides a useful proxy for identifying settings where explicit incentive contracting is difficult. The results show that, as firms become increasingly committed to OL, incentive contracts and employee selection operate as complements. However, with a high commitment to OL and an increasing level of external volatility, contracting on performance measures will become less effective. In this context, our results indicate that there is a substitution effect toward employee selection.     

How the enterprise risk management function influences decision-making in the organization – A field study of a large,global oil and gas company

Risk management has been a discipline for decades. However, organizations have only recently begun to introduce a separate enterprise risk management (ERM) function. The aim of this study is to examine the transformation of the ERM function's influence in a company over time. We use a historical case study informed by social theory on how to influence others to investigate this phenomenon. The findings show that the construction of risk technologies over time triggers a change in the ERM function's influence on decision-making. Two processes of influence are used by the ERM function: selling new ideas and managing knowledge across boundaries. In the first process, the ERM function attempts to vertically influence top management's decisions regarding acceptance of new risk management technologies. In the second process, the ERM function attempts to horizontally influence decision makers to use risk knowledge in decision processes. Theoretically, our findings contribute to our understanding of how the ERM function influences decision-making in organizations over time.     

Criticisms of capitalism,budgeting and the double enrolment: Budgetary control rhetoric and social reform in France in the 1930s and 1950s

This article is a contribution to the study of the spread of management innovations, methods and rhetorics. It particularly concerns the influence of ideological and political factors, which have so far mostly escaped in-depth study. In particular, we seek to understand to what extent a critique of society developed by social reformers can be a source of inspiration for managers, leading them to change their practices and experiment with new devices. Relying on the framework of historical change in management practices developed by Boltanski and Chiapello [Boltanski, L., & Chiapello, E. (2005). The new spirit of capitalism. London: Verso (Translation of Le nouvel esprit du capitalisme, Paris: Gallimard, 1999)], we study the specific development of budgetary control in France, examined in the light of the general political and economic history of the 20th century. This framework simultaneously encompasses the dissemination of a new accounting practice, the transformation of capitalist institutions and mo des of regulation in a given period and country, and the programmatic discourses [Miller, P., & Rose, N. (1990). Governing economic life. Economy and Society, 19(1), 1–31] associated with the historical move.     

美国社会保障制度改革建议与反思

改革社会保障制度并恢复其财务平衡是21世纪美国最重要的公共政策问题之一。为此,美国的政策制定者和学者展开了一场关于社会保障制度改革的激烈争论,并提出了广泛的改革建议。本文在介绍了美国社会保障制度的长期赤字规模之后,分析了造成制度长期赤字的根源,然后重点梳理了2000年以来主要的改革建议,最后通过反思美国社会保障改革的争论得出了几点启示,希冀有助于中国养老社会保险制度的完善和发展。     

Interdisciplinarity and tax law: The case of legal autopoiesis

This paper critically evaluates interdisciplinary research in tax law. The strategy I follow runs at two levels of abstraction.First, I examine a concrete example of interdisciplinary research in taxation. More precisely, I examine Hikaka and Prebble's (2010) recent paper where, applying Luhmannian autopoietic theory to tax law, they make a series of claims about the productivity of their research strategy as well as the consistency and coherence of Luhmann's interdisciplinary framework. Whereas my analytical and conceptual critique of Hikaka and Prebble's paper stands on its own, it should also be read as revealing the obstacles that lurk behind interdisciplinary research in using such a complex and idiosyncratic theory as Luhmann's autopoietic account of law and society. Accordingly, my analysis shows how autopoietic theory can indeed prove useful for tax and accounting reform as well as to connect tax theory and notions of public interest.Second, I extrapolate from the analysis of Hikaka and Prebble's paper some general problems that current interdisciplinary tax research needs to give further consideration: (i) how to identify productive research questions and uses of interdisciplinary resources; (ii) the dubious added value of interdisciplinary research, given its tendency to adopt complex theoretical apparatuses in a cursory way with little comparison being made to existing research achievements; and (iii) the risk of using interdisciplinary research as an exercise of confirmatory investigation and/or an exercise of mere translation of one discipline's problems into another discipline's language.     

Is heterogeneous capital depreciation important for estimating firm-level productivity? Evidence from Chinese manufacturing firms

This paper contributes to the existing literature on estimating firm-level production functions. Using Chinese manufacturing survey data, we employ the firm-level heterogeneous capital depreciation rate to measure firms’ investment and assess its role using Olley and Pakes (1996) (OP) production function estimation technique. Although there is some ongoing debate on the econometric soundness of the OP technique, we argue quantitatively that the heterogeneous depreciation rate muffles the measurement error associated with the key input demand investment. In our sample, it significantly narrows the gap of total factor productivity (TFP) estimates between the OP technique and a state-of-the-art estimation method that works without investment. We further reveal that the improved performance primarily originates from the dynamic evolution in the distribution of the capital depreciation rate.     

Data and Dogma: The Great Indian Poverty Debate

What happened to poverty in India in the 1990s has been fiercelydebated, both politically and statistically. The debate hasrun parallel to the wider debate about globalization and povertyin the 1990s and is also an important part of that debate. Theeconomic reforms of the early 1990s in India were followed byrates of economic growth that were high by historical standards.The effects on poverty remain controversial, however. The officialnumbers published by the government of India, showing an accelerationin the rate of poverty reduction from 36 percent of the populationin 1993/94 to 26 percent in 1999/2000, have been challengedfor showing both too little and too much poverty reduction.The various claims have often been frankly political, but thereare also many important statistical issues. The debate, reviewedin this article, provides an excellent example of how politicsand statistics interact in an important, largely domestic debate.Although there is no consensus on what happened to poverty inIndia in the 1990s, there is good evidence both that povertyfell and that the official estimates of poverty reduction aretoo optimistic, particularly for rural India. The issues coveredin this article, although concerned with the measurement ofpoverty in India, have wide international relevance—discrepanciesbetween surveys and national accounts, the effects of questionnairedesign, reporting periods, survey nonresponse, repair of imperfectdata, choice of poverty lines, and interplay between statisticsand politics.      

Financing the public library service

Charging for certain services to the public is one way of increasing the funding for public organisations. But how far does charging distort the purposes and management of those organisations? A critique of the recent consultative paper ‘Financing our Public Library Services: Four Subjects for Debate’ clarifies some of the issues.     

Yield Approximations: A Historical Perspective

This paper traces the historical developments of the efforts to find simple and accurate methods of approximating an annuity's implicit yield and a bond's yield to maturity. It is shown that the little known history of yield approximations is nevertheless very rich, with contributions dating as far back as the late seventeenth century. It is also shown that the standard textbook approximation formula for the bond's yield to maturity is the least accurate of a large family of formulas, some of which were suggested as early as 1855.     

The Public Policy Debate on Investors' Need for Disclosure Regulation: Accounting Historians' Help Wanted?*/ LE DÉBAT PUBLIC SUR LES BESOINS DES INVESTISSEURS EN MATIÈRE DE RÉGLEMENTATION DE L'INFORMATION: FAUT‐IL L'AIDE DES HISTORIENS DE LA COMPTABILITÉ?

This paper explores how research in accounting history can contribute to the important public policy debate regarding investors' need for disclosure regulation. Accounting, finance, and economics researchers and practitioners argue for, as well as against, disclosure regulation. The debate remains theoretical, however, because empirical studies are virtually nonexistent. This paper reviews five contexts in which accounting historians can begin a search for empirical insights concerning the costs, benefits, externalities, and effects on stakeholders of disclosure regulation. The paper's investigation of the accounting history literature suggests that accounting historians could improve the quality of the debate and help accommodate broader interests or alternative solutions to financial crises.