Reply to comments on “The association between European materiality estimates and client integrity, culture, and litigation”

The research examines the differences in materiality estimates for a sample of 181 experienced auditors from Big-Six firms located in Denmark, Ireland, Italy, Spain, Sweden, The Netherlands, and the UK. We asked each auditor to estimate materiality for a client whose integrity his/her firm rated as either high or low [Ir. Account. Rev. 1 (1994) 1.]. The research found that low client-integrity ratings resulted in lower materiality estimates for the European auditors. The research also indicates that as the cultural construct of Uncertainty Avoidance [Hofstede, G. (1980). Culture's consequences. Beverly Hills: Sage.] increased, materiality estimates also increased. Although one might have anticipated that materiality would decrease with the level of litigation, it, in fact, increased. We also compared the data from the western European countries with the estimates from a group of 83 auditors from the same Big-Six firms located in the United States.¹     

The accounting of “The Meeting”: Examining calculability within a “Fluid” local space

This study traces events in an empirical setting where a key local space, “The Meeting”, was made calculable. Building on field data from interviews and documentary sources at ABB Industry/Finland, the study theorizes in the interpretive genre, elaborating on the notion of the calculable space. It argues the following: Accounting can be extended into un-formalized and more elusive local spaces – into “fluid” spaces which are not clearly mapped within the organizational hierarchy, and which lie beyond recognized responsibility units or physically distinct cells at the factory floor. By opening visibility into the discretion of these “fluid” local spaces, a tighter alignment between programmatic ideals and real action at the organizational grass-root can be achieved. Self-devised non-financial measurement, mediating local tensions and the interests of “autonomous” actors, becomes the technology of government in this process of normalization – which is, however, not to be acknowledged as being unproblematic.     

Discussion of “Annual report readability, current earnings, and earnings persistence”

Li [2008. Annual report readability, current earnings, and earnings persistence. Journal of Accounting and Economics, this issue, doi:10.1016/j.jacceco.2008.02.003] finds that firms with losses, or with transient income, write annual reports with long sentences and big words. I begin by discussing some explanations for Li's primary results, using his more detailed results, along with the results of related papers, to assess the plausibility of those explanations. I then briefly discuss the 10-K's of a single company over the course of 3 years, to provide more detailed insight into what might drive the length and readability of annual reports. Finally, I present some possible directions for future research.     

The “real” cultural significance of accounts

Typically, accounting is portrayed as a passive information service, dedicated to faithfully reporting on economic reality. This paper, in contrast, investigates the re-presentional aspects of accounting, and the part it plays as a symbolic, cultural and hegemonic force, in struggles over the distribution of social income. The issues are examined empirically through the publishing patterns of the Journal of Accountancy, Accounting Review, and Fortune magazine between 1960 and 1973. Chronicling the changes in accounting literature is not our primary concern however. Rather, this work explores the relationships between accounting discourses and the conditions of social conflict in which these discourses are embedded. The evidence suggests that: different accounting journals specialize in different rhetorical functions; that these functions are discharged in harmony with other media and cultural forces (data on Fortune's discursive practices is provided for comparison); and that, over time, the discursive roles of accounting journals change with the evolving hegemonic climate. This paper contends that viewing accounting literature as disinterested inquiry or rigorous scholarship understates the social origins of research. Instead, we suggest that discursive accounting practices are more productively regarded as ideological weapons for participating in conflicts over the distribution of social wealth.     

Recruiting new “huddled masses” and “wretched refuse”: a prolegomenon to the human colonization of space

This paper is offered as an introduction to some of the personnel problems we are likely to face when substantial off-Earth colonization becomes feasible. Most of the literature to date on the subject portrays future colonies as similar in population and community structure to contemporary North American or European communities. A consideration of the history of colonization and of human population movements in general indicates the likelihood that future space colonization will also be hard to control and will take unexpected turns not always to the liking of those in supposed charge. Thus, the greatest impetus to move to the new colonies will come, as in the past, most likely from those throughout the world with the most desperate needs. Again, many nations may, as in the past, take the opportunity to use the new colonies as places to jettison unwanted or undesirable subgroups.     

Bank fragility, “money under the mattress”, and long-run growth: US evidence from the “perfect” Panic of 1893

This paper examines how the US financial crisis of 1893 affected state output growth between 1900 and 1930. The results indicate that a 1% increase in bank instability reduced output growth by 2–5%. A comparison of Nebraska, which had one of the highest bank failure rates, with West Virginia, which did not experience a single bank failure, reveals that disintermediation affected growth through a portfolio change among savers: people simply stopped trusting banks. Time series evidence from newspapers indicates that articles containing the words “money hidden” significantly increase after banking crises, then slowly die out.     

“The everyday accountant and researching his reality”: Further thoughts

It is the contention of this paper that accounting researchers have been dominated in thier research methodology by methods supposedly adopted from the natural sciences. It is argued that it is time that attention was paid to the possible use of radically different “naturalistic” (or “interpretive humanistic”) research approaches in order both to focus research more closely on the concerns of practitioners and to give greater insight into everyday effects of accounting and the practices of accountants themselves.