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The economics of

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  • Rhoda Pierce-Brown
  • Tony Steele

Abstract

This is a study of the accounting policies of the leading UK companies analysed by Terry Smith in Accounting for Growth (1992). Smith's critical survey achieved a certain notoriety at the time both for the content, which catalogued important ambiguities in UK GAAP, and also because the author was a leading investment analyst whose employers attempted to suppress the publication. The events that led to his dismissal were extensively reported in the financial press. In this paper we revisit the original analysis in the context of recent advances in the economics of accounting policy choice. Agency theory variables are used to predict the individual accounting policy choices and combinations of policies in Terry Smith's analysis. In particular, size, gearing, the presence of an industry regulator and industry classification are good predictors of accounting policy choices. Our results are stronger for the whole set of accounting policies than for each individual policy. This is consistent with accounting policy choice being a strategic and comprehensive selection from interactive policies rather than a series of independent decisions.

Suggested Citation

  • Rhoda Pierce-Brown & Tony Steele, 1999. "The economics of," Accounting and Business Research, Taylor & Francis Journals, vol. 29(2), pages 157-173.
    • Handle: RePEc:taf:acctbr:v:29:y:1999:i:2:p:157-173
    DOI: 10.1080/00014788.1999.9729576
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    3. Rutherford, Brian A., 2013. "A genre-theoretic approach to financial reporting research," The British Accounting Review, Elsevier, vol. 45(4), pages 297-310.
    4. Beattie, Vivien, 2005. "Moving the financial accounting research front forward: the UK contribution," The British Accounting Review, Elsevier, vol. 37(1), pages 85-114.
    5. Diana Balaciu & Victoria Bogdan & Alina Beattrice Vladu, 2009. "A Brief Review Of Creative Accounting Literature And Its Consequences In Practice," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 1(11), pages 1-16.
    6. Joanna Abhayaratna & Les Andrews & Hudan Nuch & Troy Podbury, 2008. "Part Time Employment: the Australian Experience," Staff Working Papers 0805, Productivity Commission, Government of Australia.
    7. Chen Qu & Elise Météreau & Luigi Butera & Marie Claire Villeval & Jean-Claude Dreher & Matthew Rushworth, 2019. "Neurocomputational mechanisms at play when weighing concerns for extrinsic rewards, moral values, and social image," Post-Print halshs-02193425, HAL.
    8. Sandeep Goel, 2014. "Creating Accounting Numbers Using Designed Choices: A Case Study of Indian Hotel Industry," Oblik i finansi, Institute of Accounting and Finance, issue 3, pages 29-35, September.
    9. Durguner, Sena & Barry, Peter J. & Katchova, Ani L., 2006. "Farm Financial Performance from Borrower and Lender Perspectives," 2006 Annual meeting, July 23-26, Long Beach, CA 21199, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    10. David Colander & Jessica Holmes, 2007. "Gender and graduate economics education in the US," Feminist Economics, Taylor & Francis Journals, vol. 13(2), pages 93-116.
    11. Alexis Ngantchou, 2008. "Recentrage du cadre comptable, durcissement de l'environnement fiscal et persistance de la gestion des données comptables : Une étude du comportement des Petites et Moyennes Entreprises camerounaises," Post-Print halshs-00525819, HAL.
    12. Mzyece, Agness, 2021. "Market Participation and Farm Profitability: The Case of Northern Ghana," Sustainable Agriculture Research, Canadian Center of Science and Education, vol. 10(2).
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