A Critique of the User Orientation Approach to Corporate Reporting

Generating complete and easy-to-understand information supported by a collaborative feedback mechanism and disseminating the same to the identified legitimate stakeholders through easily accessible channels of communication is the gateway of the reporting process that a behavioral inquest looks for. Continuous exchange of dialogues with each and every stakeholder (who affects the organization or is affected by the organization) in regard to their diverse needs and expectations in terms of informational requirements will be of immense value to initiate and to install a good reporting system. Though the user orientation approach to corporate reporting has dominated the accounting literature for a long period of time, grounded upon behavioralism, as it is claimed, it is subject to serious shortcomings because of its oversimplified conceptualization in terms of its objectives and postulates. The user orientation framework of corporate reporting lacks conscious reasoning in depicting a realistic approximation of the environment where accounting is to function and interact, and is not thoroughly compatible with the behavioral principles. Methodologically, user orientation framework at the face of shareholders value maximization goal of the firm begs more questions than it can answer. Instead, stakeholder value creation could have been a better approximation of the environment that can be consistent with the behavioral frame of reference to accounting and reporting. This paper is an attempt to understand the essence and significance of a behavioral inquiry into accounting and reporting to evaluate the user orientation approach in the context of behavioral principles to throw some light on the inherent deficiencies of the said approach to corporate reporting, at the backdrop of a plural environment where accounting and reporting are to function and interact.