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The Influence of Regulation on the Publication of Consolidated Statements

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  • R. G. Walker
  • Janet Mack

Abstract

The impact of regulation on the publication of consolidated statements by Australian listed companies is examined by reviewing evidence of the first use of consolidated statements by holding companies listed on the Sydney Stock Exchange, excluding companies incorporated elsewhere, and relating that evidence to the chronology of the development of statutory, professional and stock‐exchange regulations permitting or prescribing the use of consolidated statements. The findings are that the wider adoption of consolidation accounting has been associated with changes in statutory and other forms of regulation. These findings contradict the conclusions of earlier studies (Whittred, 1986, 1987, 1988), namely that regulation was of minimal influence, and that the adoption of consolidation accounting was explainable by ‘contracting cost variables’. Major flaws identified in these earlier studies were an apparent failure to recognize that Sydney listed companies may have been subject to regulations established in other jurisdictions, and a crucial misinterpretation of the history of Australian stock exchange listing rules, which led to the misidentification of listed companies as having adopted consolidation ‘voluntarily’. The findings also underline comments made previously in critiques of other papers which have tested hypotheses incorporating agency or contracting costs. While historical analysis can assist the exercise of judgment in the classification of events, those who rely on historical evidence in the development of theories and in framing hypotheses should use that evidence with care, having regard to pertinent contextual factors.

Suggested Citation

  • R. G. Walker & Janet Mack, 1998. "The Influence of Regulation on the Publication of Consolidated Statements," Abacus, Accounting Foundation, University of Sydney, vol. 34(1), pages 48-74, March.
  • Handle: RePEc:bla:abacus:v:34:y:1998:i:1:p:48-74
    DOI: 10.1111/1467-6281.00022
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    Cited by:

    1. Philippe Touron, 2000. "APPORTS ET LIMITES DE LA THEORIE INSTITUTIONNELLE DES ORGANISATIONS Etude de trois cas d'adoption de normes comptables internationales en France," Post-Print halshs-00587516, HAL.
    2. Malcolm Abbott & Angela Tan†Kantor, 2018. "Fair Value Measurement and Mandated Accounting Changes: The Case of the Victorian Rail Track Corporation," Australian Accounting Review, CPA Australia, vol. 28(2), pages 266-278, June.
    3. Stephen Owusu‐Ansah & Joanna Yeoh, 2005. "The effect of legislation on corporate disclosure practices," Abacus, Accounting Foundation, University of Sydney, vol. 41(1), pages 92-109, February.
    4. Cortese, Corinne & Irvine, Helen, 2010. "Investigating international accounting standard setting: The black box of IFRS 6," Research in Accounting Regulation, Elsevier, vol. 22(2), pages 87-95.
    5. Carnegie, Garry D. & O’Connell, Brendan T., 2014. "A longitudinal study of the interplay of corporate collapse, accounting failure and governance change in Australia: Early 1890s to early 2000s," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(6), pages 446-468.
    6. Philippe Touron, 2002. "Theorie Institutionnelle Et Adoption De Normes Comptables Internationalement Reconnues : Etude De Trois Cas Français Sur La Periode 1989 - 1993," Post-Print halshs-00584540, HAL.
    7. Malcolm Anderson, 1999. "Accounting History Publications 1998," Accounting History Review, Taylor & Francis Journals, vol. 9(3), pages 375-384.

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