The role of the public interest in shaping corporate reporting: challenges for accounting research

The concept of “public interest” has been increasingly used in the development of corporate reporting in the accounting field, particularly in the European landscape, over the past decade. However, the notion of “public interest” has always been problematic, as it varies over time, differs among stakeholders and jurisdictions, and is open to interpretation. Accounting information plays two main roles in the economy: valuation and stewardship. The reduction of information asymmetry problems through accounting information should be considered an economic benefit for society as a whole. The accounting profession has asserted that it serves the “public interest” mostly in governance, accountability, and ethical aspects of the professionals’ behaviour. The existence of unintended consequences, called “real effects,” of accounting standards has been widely discussed in accounting research, mostly from the agency theory perspective. Recent changes in the goals of corporate reporting and the increasing importance of stakeholders suggest an enlargement of the “public interest” notion, which poses challenges for accounting research in analysing the intended and unintended effects of these changes. However, accounting researchers have not shown much interest in the interaction of the public interest notion with accounting. This study aims to present an overview of the theories related to public interest to facilitate further research in this area.