Abstract
In our Call for Papers for this Special Issue, we specified that we were looking for ‘histories of accounting standard-setting using diverse theoretical and methodological perspectives’. We added that ‘histories from previously under-researched countries and contexts are particularly welcome’. While extensive comparative histories of accounting regulation are rare (Previts et al., 2010, 2011a, 2011b, 2012 are an exception), it was our hope that this Special Issue would address little-researched areas and add significantly to the literature in this area, for the benefit not only of accounting historians but also for the wider financial reporting world.
Recognising the cultural dependency of standard-setting activities, four of the seven articles that comprise this Special Issue analyse the evolution of standard-setting in different national contexts. The remaining three articles consider particular standards and standard-setting infrastructure and the processes which shaped their outcomes. In effect, the Special Issue is a set of different stories of accounting change.
Chapple (2018) examines the Australian decision to move to systematic adoption of International Financial Reporting Standards (IFRS) for its listed companies. She makes the point that while Australians had for years played a prominent role on the International Accounting Standards Committee (IASC) and then on the International Accounting Standards Board (IASB), the 2002 decision to adopt IFRS was taken in the face of significant professional opposition. The European Commission had announced its intention of adopting IFRS, which in effect gave solid support to the IASB project, but it was a bold step for Australia at that very early stage of IASB history. Chapple identifies the different interested parties and analyses their interaction and competing objectives.
Islam et al. (2018) similarly take an accounting-based political event and conduct an analysis of the participants, their arguments and the actions taken to force the removal of mandatory status of the Australian Statement of Accounting Concepts No. 4 (SAC 4) in 1993. Islam et al., like Chapple, offer a critical examination of the standard-setting infrastructure as the environment in which accounting standard-setting decisions are made.
Garcia et al. (2018) is the third article to consider a particular accounting rule – in this case, accounting for goodwill. It also acts as a bridge for the remaining four articles in this Special Issue because it examines this accounting issue in the context of four countries: the United Kingdom, the United States, France and Japan. The countries studied by Garcia et al. have not only different accounting traditions but also different legal frameworks. The United Kingdom and the United States have a closely shared accounting history, but France, the first country to regulate accounting, maintains a different approach to standard-setting in addition to its different legal system. Japan is something of an outlier in this group of four, even though it was once heavily influenced by the German accounting model. Garcia et al. link the changes in accounting rules to changes in the perception of what goodwill is and how it fits into notions of corporate value.
The remaining four articles in the Special Issue are country studies that examine areas that are relatively little exposed in the literature. First, Sanada’s (2018) article examines the Japanese system focussing on the difficult question of how Japan has adapted in the IFRS era, given that, historically, Japan’s accounting rules have been enshrined in law. The country already had a complicated intertwining of its commercial code, securities law and tax law, which had to change to accommodate a desire to approach IFRS, giving rise to four sets of accounting rules. The article considers the different mechanisms that have been used in other countries to permit some public sector confirmation of the IASB’s private sector rules and discusses Japan’s solution.
Xu et al. (2018) address a similarly difficult evolution, that of the development of business accounting in China from 1978 to 1992. The theoretical basis is the consideration of how accounting interacts with its social context to give concrete expression to the economic context. The authors point out that this sort of approach, championed by Hopwood (1983), has normally only been applied to Western democracies, but can give insights to the complicated Chinese transition to a more market-based economy.
Another country which has over time moved from a Communist command economy to one that is more amenable to the private sector is Vietnam. Phan et al. (2018) use the approach of Carnegie and Napier (2002) as the basis of their analysis of the evolution of financial accounting in Vietnam. They indicate the distinct phases that are discernible in that evolution and then attempt to explain the institutional pressures and how these have been translated into accounting change.
The final article by Baker and Rennie (2018) is also a study of change in one jurisdiction, but in this case the subject is public sector accounting and not financial reporting by private sector business. The country is Canada, and the article suggests that it is a study in institutional change, with the Office of the Auditor-General of Canada pushing for change, which eventually led the government to move to standards set by the public sector committee of the Canadian Institute of Chartered Accountants (CICA). Baker and Rennie argue that both provincial and federal government had historically developed accounting rules internally and without specifically attempting to harmonise with each other. They state that the arrival of private sector standards in the 1970s and the creation of a CICA-based standard-setter led to the establishment in turn by CICA of a public sector standards committee.
The contributions just outlined represent a minority of the submissions received for review. At one stage, we were wondering whether there might be a double special issue to publish. However, this did not eventuate. There is, of course, considerable debate among accounting historians between ‘traditional’ accounting history and ‘new’ accounting history (see, for example, Carnegie, 2014; Gomes, 2008; Napier, 2006). There is also, as Napier (2006) commented, conjecture as to what constitutes a ‘history’. The following observations are offered to provide some insights into the higher-than-anticipated rejection rate for this issue.
As regards the nature of the papers submitted, it appeared to us that certain authors had decided that only a ‘new’ accounting history approach was acceptable, but some were evidently straining to find an appropriate theoretical framework for their work. Some authors used obscure theoretical approaches, and others were unconvincing in trying to adequately apply their chosen theoretical perspective.
Against this, there were papers that were more traditional in orientation. However, these risked falling foul of reviewers who disagreed that acceptable history in accounting could be researched and written up this way. This is far from an unknown phenomenon in academe.
Hopwood (2008) helpfully drew attention to the tendency in financial reporting research generally, noting ‘What was a polycentric research environment is seen as increasingly taking on the characteristics of a more monocentric one’ (p. 87). The author appealed for a return to ‘the traditional virtues of the more tolerant and diverse research culture’ (p. 87).
There is also a link to the question of what one thinks is the purpose of research into accounting history. If one thinks it is enough to produce a body of the best quality research irrespective of its utility, then it is understandable that one might want to limit the research to new history. However, if one thinks that accounting history is a branch of accounting research generally, and it should inform both other accounting research and practitioners, then the question of relevance becomes important. Our personal experience is that the standard-setters appreciate the insights given by historical analysis, as also do students.
The methodological debate also intersected with diversity of views on what constituted history. We took the view that a Special Issue devoted to standard-setting was likely to include articles which, if appropriate, came right up to the present day or at least close to the present day. After all, leaving aside the United States, standard-setting is an activity that in Anglo-American countries does not really start until the early 1970s and in Code Law countries, if it exists at all, has emerged more recently to permit jurisdictions to engage more effectively in international debate. We were a little surprised, therefore, to find one reviewer had trouble in recommending acceptance of a paper whose period of study ended in 2014, while other reviewers raised similar concerns as to what constitutes a ‘history’ paper.
We trust that these insights provided in this Special Issue are of interest to future accounting historians, including guest editors of historical accounting journals, among other accounting journal editors. Therefore, we commend the articles in the issue and think they provide interesting and useful insights for due consideration.