Economic “Reality” and the Myth of the Bottom Line

Moore, Louella

doi:10.2308/acch.2009.23.3.327

Cited by 18 publications

(10 citation statements)

References 24 publications

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“…Given the intractability of actually demonstrating decision usefulness, the justification available to the FASB and IASB seems, in substance, merely that of ex cathedra. The discourse of standard‐setting is not about reality (Moore ). As Dyckman and Morse () admitted, choice of accounting policy rests ultimately on one's prior belief in the underlying theory; any evidence that can be adduced leads to multiple conclusions based on pre‐existing beliefs.…”

Section: From the Individual To The Market—the Macro Realmmentioning

confidence: 99%

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Rethinking Decision Usefulness

Williams

Ravenscroft

2014

Contemporary Accting Res

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"Decision usefulness" has been the organizing criterion for accounting policy and accounting scholarship for over forty years. Its authority however, was not gained over time through explicit theory development or argumentation, but was instead "born full grown" (Staubus, 1999, p. 163)as a conceptual "takeover in the dead of night" (p. 338). In essence, the concept of decision usefulness assumed a central place as the rationale for accounting choice by stealth rather than by careful argument or based on empirical evidence. The lack of an extended period of argumentation and debate over the meaning of decision usefulness meant its conceptual weaknesses were allowed to remain remarked upon but never resolved.In this paper we argue that as the central focus defining and guiding accounting policy, decision usefulness has not proven any more useful than earlier, allegedly normative theories of accounting did. The recent debates on IFRS versus GAAP provide vivid testament to the inadequacy of decision usefulness as a criterion for selecting among alternative accounting choices. We briefly examine the history of decision usefulness and its emergence as the chief criterion for selecting policy. We then argue that in light of recent developments in our understanding of human decision-making and the shortcomings of conventional economic understanding, decision usefulness cannot be defined in a manner that allows its application to policy choice at either the micro (individual decision-maker) level or the macro, economy-wide level. . We find that the current concept of decision usefulness is incoherent because policy makers and scholars have not seriously dealt with deeply-flawed ontological assumptions inherent in its definition and justification. We also describe how the decision usefulness criterion applied in the policy realm seriously undermines the current dominant methodology employed in accounting research to understand financial reporting phenomena. In our conclusions we argue for a root metaphor for accounting policy and research that is more consistent with the regulatory function of accounting in society, i.e., a more explicit return to accountability for understanding accounting and for making accounting policy.3

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Section: From the Individual To The Market—the Macro Realmmentioning

confidence: 99%

“…16 Given the intractability of actually demonstrating decision usefulness, the justification available to the FASB and IASB seems, in substance, merely that of ex cathedra. The discourse of standard setting is not about reality (Moore 2009). As Dyckman and Morse 15.…”

Section: From the Individual To The Market-the Macro Realmmentioning

confidence: 99%

Rethinking Decision Usefulness

Williams

Ravenscroft

2014

Contemporary Accting Res

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“…On the other hand, the decision usefulness approach is supported by the desire of reducing the state of uncertainty about firms' operations. However, there is no agreement as to what kind of data can be considered most useful (Moore, 2009). Alexander (2015) argues that IFRS standards provide one particular reality that is mainly produced to satisfy finance providers' needs, whereas other users of accounts may not find the information they require.…”

Section: The Objective Of Accounting: Is It Effectively Achieved?mentioning

confidence: 99%

Accounting and philosophy: The construction of social reality framework

Elkhashen¹,

Ntim²

2018

J. Account. Taxation

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Accounting scandals and their severe consequences shed light on the ambiguity of accounting. This paper attempts to explore the philosophical roots of accounting in an attempt to remove, or at least mitigate, this ambiguity. The study employs Searle's framework of the construction of social reality as an approach to achieve this aim. It is argued that the main problem of accounting is its failure to faithfully represent economic reality. The evaluation of recent developments in accounting suggests that although these attempts are a step towards reaching a better representation of economic reality, they are insufficient. A great deal of accounting ambiguity still exists, thus, future accounting scandals are likely. It is therefore suggested that a deeper understanding of the philosophical aspects of accounting should be taken into consideration by accounting standard setters.

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“…For example, the current conceptual framework defines assets and liabilities as 'economic' future benefits or losses. A consequence of this economic focus is the neglect of social and environmental reporting in the audited financial reports by the dominant 'capital markets' researchers (see Moore, 2009). …”

Section: Society-nature Conceptual Frameworkmentioning

confidence: 99%

“…(Hopwood, 2009, p. 890) The financial accounting conceptual framework projects have remained stalled, as they attempt to capture the principles and concepts of measurement amid contention from a deregulation push supported by vested political and business interests. These framework projects might also be seen as redundant by some, as market oriented thought promote(d) accounting as an information science informing capital markets (Moore, 2009) as purported by the now discredited 'EMH'.…”

Section: Society-nature Conceptual Frameworkmentioning

confidence: 99%

Can the financialised atmosphere be effectively regulated and accounted for?

McNicholas

Windsor

2011

Accounting, Auditing &Amp; Accountability Journal

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Purpose -A critical analysis of the proposed Australian emissions trading scheme (ETS) as a complex market solution to reduce greenhouse gases (GHGs). Specifically we examine the financial regulatory infrastructure that will more than likely oversee the Australian ETS, the same regulatory infrastructure which failed to prevent the global financial crisis. Design/methodology/approach -A critical examination of the financialisation of the atmosphere that follows the growth of the financialisation of capitalism when economic activity shifted from production and service sectors to finance. Financialisation of capitalism is supported by capitalist regulation influenced by neoliberal doctrines of free markets and small government. Findings -Trillions of dollars of taxpayer funds bailed out large financial institutions that nearly collapsed after unregulated trading in complex financial products that were supposed to hedge future risk. Corporate emissions trading will involve similar financial products. The measurement and reporting of actual emissions to support the Australian ETS also creates challenges for the accountancy profession to provide a workable conceptual framework. Practical implications -If the current financial infrastructure required for the GHG emissions trading scheme is flawed as evidence indicates, no amount of taxpayer funded bailouts will reverse the extreme climate change associated with an environmental catastrophe. Originality/value -The application of financialisation of monopoly capitalism and capitalist regulation theories to the critical analysis of commoditised GHGs traded as financial products in the proposed Australian ETS.

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Economic “Reality” and the Myth of the Bottom Line

Cited by 18 publications

References 24 publications

Rethinking Decision Usefulness

Rethinking Decision Usefulness

Accounting and philosophy: The construction of social reality framework

Can the financialised atmosphere be effectively regulated and accounted for?

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