IDEAS home Printed from https://ideas.repec.org/a/bla/abacus/v51y2015i4p549-571.html
   My bibliography  Save this article

Measurement in Financial Reporting: Half a Century of Research and Practice

Author

Listed:
  • Geoffrey Whittington

Abstract

type="main"> The paper explores developments in the choice of measurement method in financial reporting over the half century that has elapsed since the foundation of Abacus in 1965. The discussion is confined to the specific problem of measuring individual assets and liabilities, rather than the wider problems of the choice of measurement unit (as in inflation accounting) or capital maintenance (as in income measurement). Changes in financial reporting practice and standards are considered in relation to developments in academic research. This has been a two-way process: research has been stimulated by problems of practice, and practice, particularly as embodied in standards, has been influenced by the results of research. Both have been influenced by significant events in the world economy, notably the inflation of the 1970s and the global financial crisis that started in 2007. Historical cost has retained its position as the predominant measurement technique in practice, but considerable progress has been made in the implementation and understanding of current value measurements, although the principles for choosing between alternative current values (particularly ‘entry’ values as opposed to ‘exit’ values) require further exploration by standard setters, assisted by academic research.

Suggested Citation

  • Geoffrey Whittington, 2015. "Measurement in Financial Reporting: Half a Century of Research and Practice," Abacus, Accounting Foundation, University of Sydney, vol. 51(4), pages 549-571, December.
    • Handle: RePEc:bla:abacus:v:51:y:2015:i:4:p:549-571
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/abac.12061
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Baxter, Wt, 1967. "Accounting Values - Sale Price Versus Replacement Cost," Journal of Accounting Research, Wiley Blackwell, vol. 5(2), pages 208-214.
    2. Beaver, Wh, 1968. "Information Content Of Annual Earnings Announcements," Journal of Accounting Research, Wiley Blackwell, vol. 6, pages 67-92.
    3. Guillaume Plantin & Haresh Sapra & Hyun Song Shin, 2008. "Marking‐to‐Market: Panacea or Pandora's Box?," Journal of Accounting Research, Wiley Blackwell, vol. 46(2), pages 435-460, May.
    4. Camfferman, Kees & Zeff, Stephen A., 2015. "Aiming for Global Accounting Standards: The International Accounting Standards Board, 2001-2011," OUP Catalogue, Oxford University Press, number 9780199646319.
    5. Christian Laux & Christian Leuz, 2010. "Did Fair-Value Accounting Contribute to the Financial Crisis?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 93-118, Winter.
    6. Stephen Penman, 2007. "Financial reporting quality: is fair value a plus or a minus?," Accounting and Business Research, Taylor & Francis Journals, vol. 37(S1), pages 33-44.
    7. Martin Walker, 1997. "Clean Surplus Accounting Models and Market-based Accounting Research: A Review," Accounting and Business Research, Taylor & Francis Journals, vol. 27(4), pages 341-355.
    8. Amir Amel-Zadeh & Geoff Meeks, 2013. "Bank Failure, Mark-to-market and the Financial Crisis," Abacus, Accounting Foundation, University of Sydney, vol. 49(3), pages 308-339, September.
    9. Mary Barth, 2007. "Standard-setting measurement issues and the relevance of research," Accounting and Business Research, Taylor & Francis Journals, vol. 37(S1), pages 7-15.
    10. Ball, R & Brown, P, 1968. "Empirical Evaluation Of Accounting Income Numbers," Journal of Accounting Research, Wiley Blackwell, vol. 6(2), pages 159-178.
    11. Andrew W. Stark, 1997. "The Impact of Irreversibility, Uncertainty and Timing Options on Deprival Valuations and the Detection of Monopoly Profits," Accounting and Business Research, Taylor & Francis Journals, vol. 28(1), pages 40-52, July.
    12. Geoffrey Whittington, 2008. "Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View," Abacus, Accounting Foundation, University of Sydney, vol. 44(2), pages 139-168, June.
    13. Mary Barth & Wayne Landsman, 2010. "How did Financial Reporting Contribute to the Financial Crisis?," European Accounting Review, Taylor & Francis Journals, vol. 19(3), pages 399-423.
    14. Peter Walton, 2009. "Les délibérations de l'IASB en 2002 et 2003 : une analyse statistique," ACCRA, Association francophone de comptabilité, vol. 15(1), pages 35-53.
    15. Geoffrey Whittington, 2010. "Measurement in Financial Reporting," Abacus, Accounting Foundation, University of Sydney, vol. 46(1), pages 104-110, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martina K. Linnenluecke & Jacqueline Birt & Xiaoyan Chen & Xin Ling & Tom Smith, 2017. "Accounting Research in Abacus, A&F, AAR, and AJM from 2008–2015: A Review and Research Agenda," Abacus, Accounting Foundation, University of Sydney, vol. 53(2), pages 159-179, June.
    2. Stewart Jones & Murray Wells, 2015. "Accounting Research: Where Now?," Abacus, Accounting Foundation, University of Sydney, vol. 51(4), pages 572-586, December.
    3. Esraa Esam Alharasis & Maria Prokofieva & Rateb Mohammad Alqatamin & Colin Clark, 2020. "Fair Value Accounting and Implications for the Auditing Profession: Historical Overview," Accounting and Finance Research, Sciedu Press, vol. 9(3), pages 1-31, August.
    4. Richard Barker & Alan Teixeira, 2018. "Gaps in the IFRS Conceptual Framework," Accounting in Europe, Taylor & Francis Journals, vol. 15(2), pages 153-166, May.
    5. Yasmine Chahed, 2021. "Words and Numbers: Financialization and Accounting Standard‐Setting in the United Kingdom," Contemporary Accounting Research, John Wiley & Sons, vol. 38(1), pages 302-337, March.
    6. Guilherme Belloque & Martina K Linnenluecke & Mauricio Marrone & Abhay K Singh & Rui Xue, 2021. "55 years of Abacus: Evolution of Research Streams and Future Research Directions," Abacus, Accounting Foundation, University of Sydney, vol. 57(3), pages 593-618, September.
    7. Francesca Beccacece & Roberto Tasca & Luisa Tibiletti, 2021. "The Macaulay Duration: A Key Indicator for the Risk-Adjustment in Fair Value," International Journal of Business and Management, Canadian Center of Science and Education, vol. 13(12), pages 251-251, July.
    8. Ronita Ram & Susan Newberry, 2017. "Agenda Entrance Complexity in International Accounting Standard Setting: The Case of IFRS for SMEs," Abacus, Accounting Foundation, University of Sydney, vol. 53(4), pages 485-512, December.
    9. Hayoun, Shaul, 2019. "How fair value is both market-based and entity-specific: The irreducibility of value constellations to market prices," Accounting, Organizations and Society, Elsevier, vol. 73(C), pages 68-82.
    10. Richard D. Morris, 2024. "Commentary on ‘Accounting for Inflation: The Dog That Didn't Bark’," Abacus, Accounting Foundation, University of Sydney, vol. 60(1), pages 13-20, March.
    11. Stewart Jones & Nurul Alam, 2019. "A machine learning analysis of citation impact among selected Pacific Basin journals," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2509-2552, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Amir Amel-Zadeh & Geoff Meeks, 2013. "Bank Failure, Mark-to-market and the Financial Crisis," Abacus, Accounting Foundation, University of Sydney, vol. 49(3), pages 308-339, September.
    2. Lin Liao & Helen Kang & Richard D. Morris, 2021. "The value relevance of fair value and historical cost measurements during the financial crisis," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 2069-2107, April.
    3. Palea, Vera, 2015. "The political economy of fair value reporting and the governance of the standards-setting process: Critical issues and pitfalls from a continental European union perspective," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 29(C), pages 1-15.
    4. Hayoun, Shaul, 2019. "How fair value is both market-based and entity-specific: The irreducibility of value constellations to market prices," Accounting, Organizations and Society, Elsevier, vol. 73(C), pages 68-82.
    5. Mahieux, Lucas, 2024. "Fair value accounting, illiquid assets, and financial stability," Other publications TiSEM 5dd826be-1379-4456-a9c2-e, Tilburg University, School of Economics and Management.
    6. Mohammad Aladwan, 2018. "Accounting Measurement Revolution and Market Value," Modern Applied Science, Canadian Center of Science and Education, vol. 12(11), pages 279-279, November.
    7. Matt Pinnuck, 2012. "A Review of the Role of Financial Reporting in the Global Financial Crisis," Australian Accounting Review, CPA Australia, vol. 22(1), pages 1-14, March.
    8. Downing, Jeff, 2019. "Accounting standards and banking regulation: Some effects of divergence," Research in International Business and Finance, Elsevier, vol. 47(C), pages 386-397.
    9. Georgiou, Omiros & Jack, Lisa, 2011. "In pursuit of legitimacy: A history behind fair value accounting," The British Accounting Review, Elsevier, vol. 43(4), pages 311-323.
    10. Marco Fasan & Carlo Marcon, 2014. "Accounting Tradition and other drivers of the Fair Value choice: An Opportunistic Management perspective," Working Papers 13, Venice School of Management - Department of Management, Università Ca' Foscari Venezia.
    11. Kohlbeck, Mark & Smith, Thomas & Valencia, Adrian, 2017. "Auditors and net transfers of Level 3 fair-valued financial instruments," Advances in accounting, Elsevier, vol. 36(C), pages 27-39.
    12. Macve, R.H., 2015. "Fair value vs conservatism? Aspects of the history of accounting, auditing, business and finance from ancient Mesopotamia to modern China," The British Accounting Review, Elsevier, vol. 47(2), pages 124-141.
    13. Andrew Ellul & Chotibhak Jotikasthira & Christian T. Lundblad & Yihui Wang, 2012. "Is Historical Cost Accounting a Panacea? Market Stress, Incentive Distortions, and Gains Trading," FMG Discussion Papers dp701, Financial Markets Group.
    14. Chandra Kanodia & Haresh Sapra, 2016. "A Real Effects Perspective to Accounting Measurement and Disclosure: Implications and Insights for Future Research," Journal of Accounting Research, Wiley Blackwell, vol. 54(2), pages 623-676, May.
    15. Michel Magnan & Garen Markarian, 2011. "Accounting, Governance and the Crisis: Is Risk the Missing Link?," European Accounting Review, Taylor & Francis Journals, vol. 20(2), pages 215-231.
    16. Mohamed Sellami, 2006. "Typologie des déterminants comptables de la valeur : Apports de l'approche économique de l'information dans la mesure de la valeur," Post-Print halshs-00558252, HAL.
    17. Wessel M. Badenhorst, 2014. "Fair Value Measurements of Control Premiums," Accounting Perspectives, John Wiley & Sons, vol. 13(3), pages 173-188, September.
    18. Gregory Waymire & Sudipta Basu, 2011. "Economic crisis and accounting evolution," Accounting and Business Research, Taylor & Francis Journals, vol. 41(3), pages 207-232, August.
    19. Palea, Vera & Biancone, Paolo Pietro, 2017. "Which Accounting Rules for Economic and Social Sustainable Development? Engaging Critically with IFRS Adoption in the EU," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201733, University of Turin.
    20. Erb, Carsten & Pelger, Christoph, 2015. "“Twisting words”? A study of the construction and reconstruction of reliability in financial reporting standard-setting," Accounting, Organizations and Society, Elsevier, vol. 40(C), pages 13-40.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:abacus:v:51:y:2015:i:4:p:549-571. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0001-3072 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.