The use of historical analysis to provide alternatives to authoritative justifications of accounting standards: A focus on stock dividends

This study demonstrates the effectiveness and importance of historical analysis as a pedagogic tool. Specifically, the study illustrates how historical analysis may provide explanations that provide greater insight into the reasons underlying the construction of current reporting requirements than may be obtained from the authoritative text, the conceptual framework, or accounting theory. The study also examines how historical analysis may be used to demonstrate to students that, rather than being conceived and constructed in a theoretical and conceptual vacuum, accounting policy decisions are often heavily influenced, and sometimes constrained, by legal, political, and societal forces. In this particular case, the research suggests that current reporting requirements were constructed to discourage the use of stock dividends that policymakers perceived as a deceptive financial practice. In addition, the research illustrates how the dynamic and evolutionary attributes of the standard-setting process become clearly visible when examined from a historical perspective. The study concludes by recommending and describing a “positive approach” to accounting education that challenges students to question why current reporting requirements exist in their present form.