Minsky’s financial instability hypothesis, information asymmetry and accounting information: the UK financial crises of 1866 and 1987

Abstract

This article examines two major events in the economic and financial history of the UK in terms of the financial instability hypothesis (FIH), a theory of boom, bust and financial crises. The first involves the rise of limited liability in the 1860s and its subsequent disgrace. The second involves the economic boom of the 1980s, the stock market crash, and the subsequent recession. It is shown that, while the FIH is underpinned by a microeconomic model of the financial management of a business, it does not recognize the differences between the company's interests and those of its owners, the conflicts caused, the likelihood of informational asymmetry and its implications for accounting information. The article shows how in these two episodes the owners of companies may exploit their limited liability and informational asymmetry. Because the FIH does not consider these factors, it is incomplete both as an explanation and as a predictor of financial crises.

Values of environmental landscape amenities during the 2000–2006 real estate boom and subsequent 2008 recession

“…A survey conducted during the second quarter of 2008, while the sub-prime mortgage meltdown was still underway, showed that 89% of respondents were cutting back on spending despite various emergency stimulus packages, including the Federal government's tax rebate to low-and middle-income tax payers (Consumer Behavior Report 2008). A number of studies have focused on the impact of a recession on changes in consumers' financial decision making (Caplovitz 1979, King 1994, Barnes 2007, Belsky et al 2008. Van Raaij and Eilander (1983) pointed out that consumers have different ways of curtailing expenses during a recession compared to normal times: buying cheaper products, buying less, changing quality or changing life styles.…”

Accountability by the accountable self: The case of Leone Wollemborg

“…In addition, by focusing specifically on the ‘accountable self’ attitude and explanations to the ‘other’, this work adds to the social impact of accounting by exploring how accounting (Abeysekera, 2005; Barnes, 2007; Chandler, 2016; Fülbier and Klein, 2015; Platonova, 2009; Sokolov, 2015; Walker, 2008) and accountability (Antonelli et al, 2017; Evans and Pierpoint, 2015; Fowler and Cordery, 2015; Jacobs and Walker, 2004; Killian, 2015; Oakes and Young, 2008; Rammal and Parker, 2012; Sargiacomo and Gomes, 2011) are shaped by, and shape, context and social relations.…”

“…In this regard, seminal studies recognised the ‘accountable self’ as a key unit through which to analyse accountability (Boland and Schultze, 1996; Bovens, 2010; McKernan, 2012; McKernan and MacLullich, 2004; Munro and Mouritsen, 1996; Roberts, 1991, 1996; Roberts and Scapens, 1985; Sinclair, 1995; Willmott, 1996). Accounting history literature has mostly concentrated on depicting how accounting (Abeysekera, 2005; Barnes, 2007; Chandler, 2016; Fülbier and Klein, 2015; Platonova, 2009; Sokolov, 2015; Walker, 2008) and accountability practices (Antonelli et al, 2017; Fowler and Cordery, 2015; Jacobs and Walker, 2004; Killian, 2015; Oakes and Young, 2008; Rammal and Parker, 2012; Sargiacomo and Gomes, 2011) evolve with respect to the organisational and social contexts, leaving at the margins explorations of the role of the ‘accountable self’ in this process. Among the few exceptions, there is the work of Evans and Pierpoint (2015), which explored directors’ accountability in relation to impression management, and the paper of Oakes and Young (2008) exploring how accountability was conceptualised and practised within Hull House, by focusing on the founder’s activities.…”

Financial scandals: a historical overview

“…However, the collapse now led to a significant economic slowdown arising from an increased perception of risk, compounded by the underdeveloped state of accountancy and auditing. (Robb 2002, Barnes 2007.…”