ACCA Relevance of accounting research 2010

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T e Relevance and Utilit o Leading Accounting Researc

Researc re ort 120



T e Relevance and Utilit o Leading Accounting Researc

Pro or J fr U rmManchester Business School, University o Manchester

and

Pro or Br d O’Dw rUniversity o Amsterdam Business School

Certi ed Accountants Educational Trust (London), 2010



ISBN: 978-1-85908-467-0

© The Association o Chartered Certi ed Accountants, 2010

ACCA’s international research programme generates high-pro le, high-quality, cutting-edge research. All researchreports rom this programme are subject to a rigorous peer-review process, and are independently reviewed by twoexperts o international standing, one academic and one pro essional in practice.

The Council o the Association o Chartered Certi ed Accountants consider this study to be a worthwhile contribution todiscussion but do not necessarily share the views expressed, which are those o the authors alone. No responsibility orloss occasioned to any person acting or re raining rom acting as a result o any material in this publication can beaccepted by the authors or publisher. Published by Certi ed Accountants Educational Trust or the Association oChartered Certi ed Accountants, 29 Lincoln’s Inn Fields, London WC2A 3EE.

ACKNOWLEDGEMENTS

We are very grate ul to ACCA or providing unding towards this study, and to Caroline Oades o ACCA or her suggestionsand encouragement in the initial development o the ideas. We are also very grate ul to our research assistant, MatthewFoote, or helping us collect and download the data, and to Katherine Ng and Barbara Grunewald o ACCA, the reviewerso an earlier dra t o this report, and Adrian Berendt, or their valuable suggestions. Comments on an early dra t

presented at a Wards Seminar in the Department o Accounting and Finance at the University o Glasgow and at the2010 British Accounting Association and European Accounting Association con erences are also grate ully acknowledged.We, however, remain responsible or the content o the report.

AbOUT ThE AUThORS

Brendan O´Dwyer is pro essor o accounting at the University o Amsterdam Business School. His research interestsembrace three broad areas: corporate sustainability accounting, auditing and accountability; non-governmentalorganisation (NGO) accounting and accountability; and accounting pro ession regulation. His academic work has beenpublished widely in journals such as: Accounting, Organizations and Society ; European Accounting Review ; Accounting andBusiness Research ; and Accounting, Auditing & Accountability Journal . Brendan is an associate editor o Accounting,Auditing & Accountability Journal .

Je rey Unerman is pro essor o accounting and accountability at Manchester Business School. He is co-editor oSustainability Accounting and Accountability (2007) and co-author o Financial Accounting Theory – European Edition (2006). He is currently joint editor o Social and Environmental Accountability Journal , an associate editor o Accounting,Auditing and Accountability Journal , and general secretary o the British Accounting Association. He is also a member othe ACCA Research Committee. He holds a PhD in social and environmental accounting rom the University o She eld,is a member o the Institute o Chartered Accountants in England and Wales and the Association o Chartered Certi edAccountants, and is an honorary member o CPA Australia.



3The Relevance anD UTiliTy OleaDing accOUnTing ReseaRch

Contents

ex ut umm r 5

1. i trodu t o 7

2. M t od 9

3. D t 12

4. summ r , o u o d r omm d t o 19

R r 21



4




EXECUTIVE SUMMARY

The aim o this study is addressed through an analysis othe key topics and issues covered in all 1,961 substantiveresearch articles published in the top six journals over the10-year period leading up to the sub-prime crisis, credit

crunch and global nancial crisis – 1999 to 2008. Duringthis period the collapse o Enron and WorldComhighlighted a need or research to examine accounting in abroader context, and part o the analysis in this reportcomments on any apparent changes in the scope oleading accounting research post-Enron.

The topics and issues covered by the journal articles havebeen divided into ve broad categories:

• aspects o the traditional economic model underlyingmuch accounting research

• comprehensibility o accounting in ormation

• accounting or new types or orms o economictransaction

• accounting or the social, societal and/or ecologicalimpacts o organisations, and

• the country or regional ocus o the articles.

Figure ES1 provides a summary o the ndings rom thisresearch study. It shows the number o articles each yearthat addressed the ve most requent (or popular) topicsor issues in each o the rst our 'topic' categories o

analysis. This graph does not include data rom thecountry or regional category as this category ocuses onthe place to which research relates whereas the othercategories are all concerned with data about topicscovered within the articles.

Figure ES1: Total num er o articles er annum across t efve most requent to ics in eac categor

The relevance and scope o academic research, and theadequacy o accounting practices, are among severalissues that have been called into question in the wake othe 2008 sub-prime banking crisis and ensuing credit

crunch and global nancial crisis. Academic research hasan important role to play, both in assessing the extent towhich existing practices are ‘ t or purpose’ and indeveloping new practices to address changing business,economic and societal needs. Research also in orms theteaching curricula in universities, thus a ecting the rangeo issues o which uture generations will become awareand consider important.

It is there ore crucial that the range o academic studiesundertaken is su ciently broad to investigate adequatelyand develop the many diverse roles o accounting inbusiness and society today. To help ascertain the extent towhich the accounting academy is meeting these duties toresearch a broad range o issues, the aim o this researchreport is to provide an overview o the scope o researchpublished in the top-rated international peer-reviewedaccounting journals.

Achieving publication in these journals is generallyregarded as signi cantly ‘career-enhancing’ or academics,as it is considered to be a badge o the highest-qualityresearch. The range o research published in thesejournals there ore sends important signals to academicsabout the kinds o research it is ‘acceptable’ or them toconduct. Undertaking research on topics (or usingmethods) that are not thought to be welcome in these

journals is regarded by many as potentially limiting or evendamaging or one’s career. Through their editorial policies,the editors o these journals (supported and guided bymembers o their editorial advisory boards) thus havesigni cant infuence on the scope o the academicresearch that is conducted.

The status o ‘leading journal’ is, in e ect, a statuscon erred by members o the academic community. Wherea journal’s editorial policies are insu ciently broad toencompass and encourage research that meets thechanging needs o societies in which academic researcherslive, the editors might nd that the academic community,infuenced by the practitioner and political/regulatorycommunities, no longer accepts that the research that thejournal publishes counts as ‘top-quality’.

Executive summar

140

120

10080

60

40

20

0number of articles pe

r category

2 0 0 8

2 0 0 7

2 0 0 6

2 0 0 5

2 0 0 4

2 0 0 3

2 0 0 2

2 0 0 1

2 0 0 0

1 9 9 9

Traditional ec onomic ocus

Social, societal and/or environmental impact

Comprehensibility

New orms o economic transaction



6

As can be seen rom Figure ES1, and as is analysed ingreater depth in the remainder o this report, the articlespublished across these six top-ranked accounting journalsduring the period reviewed ocus primarily on the

traditional accounting orthodoxy o the last three decades– the economic role o accounting. This result in itsel isnot surprising, as it would be expected that the largestnumber o articles in the oremost accounting journalsshould ocus on issues related to the dominant paradigmin accounting research.

What is surprising is an almost exclusive ocus in several othe leading journals on airly narrow aspects o thiseconomic unctioning o accounting. While it is reasonable

or these journals to publish many articles with this ocus,it may not be healthy or the uture o the accountingacademy or accounting practice or them to publish so ewarticles that either ocus on issues challenging thedominant assumptions underlying accounting theory andpractice (many o which were very publicly questioned bypolicymakers in the wake o the credit crunch) or that seekto provide insights to help develop accounting in ways thatmay serve the changing needs o society.

It is notable that very little research published in thesejournals has ocused on an examination o the accountingissues associated with the new orms o nancial andeconomic transaction that were so spectacularlyimplicated in the events leading up to the sub-primebanking crisis and credit crunch. It appears that theseleading journals did little o consequence to encourage

researchers to examine proactively (ie be ore the sub-prime crisis was upon us) the problems caused by, andpotential solutions to, the lack o transparency andcomprehensibility in accounting or these new and highlymaterial orms o transaction.

Furthermore, only a small proportion o the articles ocuson countries outside the US, demonstrating the parochialnature o much research. This limited geographicalcoverage may not adequately address the needs osocieties outside the US.

A key recommendation rom the research presented in thisreport is that or the uture health o the accountingacademy and o individual leading journals, more o thelatter need to encourage the submission and publicationo a broader range o accounting research. One o theleading journals has recently begun doing this through achange in its editorial policy and the composition o itseditorial board. I other journals do not ollow this example,they risk losing their status as oremost journals and willalso contribute to the risk that accounting research willlose credibility, i it is no longer seen to serve the needs othe societies that und this research.




1. INTRODUCTION

The role and responsibilities o academics in both teachingand research are among several issues highlighted by thesub-prime banking crisis and the ensuing credit crunchand global nancial crisis.

The curricula o business education establishments havebeen criticised or largely ailing to inculcate a sense oethical responsibility among their graduates. This criticismhas been particularly aimed at the MBA programmes olarge business schools. It has been claimed by many (Fern2009) that these programmes o ten promoted, possiblyunintentionally, ‘greed and recklessness’ in graduatesthrough teaching nance and other topics rom anuncritical mainstream perspective o pro t maximisation,unmediated by considerations o longer-term economic,social and ecological sustainability (Harney 2008; Walker2009). Delivery o this narrow curriculum in most (but notall) business schools continued despite growing public,business and governmental recognition that businesseshave social and ecological responsibilities that are broaderthan their economic duties (Harney 2008).

Criticism has also been levelled at the ailure o academicresearch to provide an e ective critique o , and toquestion, the key assumptions and practices underpinningthe prevalent economic and business models. Thesemodels were highlighted in the credit crunch as beingdys unctional. As research is used to in orm teaching ingood universities, any lack o research questioning thedominant business and economic models (or that providesinsights or developing alternative models) may have

helped to embed a orm o business education that hasalmost unquestioningly accepted the desirability odominant nance and business practices (Harney 2008).

Much o the criticism highlighting the ailings o academicresearch has been levelled at academic economists, whohave been accused o exhibiting too much aith in theso-called rational economics model and in the e ciency omarkets (McSweeney 2009). Although some economistshad questioned the plausibility, and potentially negativeimpacts, o reliance upon these assumptions, mainstreameconomists and mainstream economics journals largely

ailed to address these issues (Stewart 2009). Instead,these economists accepted the economic orthodoxy o thepast three decades largely unquestioningly anduncritically. This orthodox approach, or example,dismissed insights rom previously accepted economicmodels such as the Keynesian model that has, since thecredit crunch, returned to avour with some (Skidelsky2009). Most academic economists also ailed to recognisethe de ciencies o the prevailing economic orthodoxy inthe context o contemporary and changed market, creditand other economic conditions:

As a pro ession, economics not only has nothing to say about what caused the world to come to the brink o

nancial collapse last autumn, but also a supreme lack o

interest in it. (Elliott 2009)

Turning more speci cally to accounting, practices in thisarea have been subject to some public and academiccriticism in respect o their ailure to predict or prevent thesub-prime banking crisis, credit crunch and global

nancial crisis. Among these criticisms have been theailure o accounting practices to provide clear in ormationthat would have enabled investors to understand the creditand other risks in individual company balance sheets, andthe role o mark-to-market accounting requirements inpossibly exacerbating banks’ balance sheet volatility. (For arange o critiques o the role o accounting in the creditcrunch see, or example, Arnold 2009; Hopwood 2009;Humphrey et al. 2009; Laux and Leuz 2009; McSweeney2009; Power 2009; Roberts and Jones 2009; Sikka 2009.)

Among the constructive critiques o the role and possiblede ciencies o accounting practice prior to the creditcrunch, ACCA published a Corporate Governance and Credit Crunch discussion paper in late 2008 (Moxey and Berendt2008). The paper argues that an issue or the accountingpro ession was that nancial accounts were not (and arenot) as e ective as they need to be in making transparentsome o the more complex transactions and corporaterisks. Hence contemporary accounting practices could beregarded as not having developed adequately to keep pacewith changes in business and nancing practices, so as tomeet the needs o society.

In a speech to mark the launch o the ACCA discussionpaper, along with the ACCA Corporate Governance and Risk Management Agenda (ACCA 2008), at the House o Lords

in London on 17 November 2008, Richard Aitken-Davies,then ACCA president, commented that although relativelylittle blame or the credit crunch and economic collapsehad so ar been attributed to the accounting pro ession,the role o the pro ession in these events would inevitablycome under closer scrutiny. Just two days earlier, theleaders o the G20 countries had met in Washington toaddress the nancial and economic crisis. Among their keyaction points was a resolve to ‘strengthen transparencyand accountability’.

Nonetheless, this public and academic attention to theailings o accounting practice in predicting and/or

preventing the sub-prime crisis and credit crunch has notyet shone a particularly bright spotlight on the role oaccounting academics ( or one exception to this see Arnold2009). While some papers have been published that havecriticised the role o accounting in the period be ore thecredit crunch and sub-prime crisis, there has been verylittle examination o the role o the accounting academy.Given that the global nancial crisis has raised questionsabout the ‘ tness or purpose’ o methods o accountingand the relevance and appropriateness o accounting andreporting practices, questions arise regarding academicwillingness to develop or analyse anything other thanpractices that support ‘business as usual’.

1. Introduction



8

Arguably, a key role o academic accountants should be toscrutinise accounting practices to see whether thesepractices provide long-term bene ts to business andsociety, and to in orm the development o new practices

that meet changing business and societal needs. Thehigh-pro le accounting issues implicit in the lack otransparency surrounding the collapse o Enron,WorldCom and others in late 2001 and 2002 should haveacted as a ‘wake-up call’ to accounting academics, alertingthem to a need to examine the adequacy o accountingpractices or meeting society’s needs (Unerman andO’Dwyer 2004). Arguably, this should also have included abroader contextual examination o these practices –augmenting research that ocuses on narrow technicalaspects o individual accounting practices.

Anecdotally, there is much comment that the leadingacademic peer-reviewed accounting journals are primarilyinterested in narrow technocratic accounting research,usually ocusing only on US data, which does not examinethe broader societal impact or implications o accountingpractices (Arnold 2009). Achieving publication o a paperin these leading journals is generally considered to be amark o high-quality research, and many academics aspireto having their papers accepted in a leading journal.Internationally, career and promotion prospects oacademics are o ten perceived to be infuenced byachieving publication in these leading journals, because othe recognition this implies or the quality o theirresearch. Making a decision to research issues, or useresearch methods, that do not appear to be o interest to

such journals is there ore o ten perceived by emerging andestablished scholars as potentially highly damaging totheir career prospects (Hopwood 2008). This system isalso considered by some to deter wider dissemination andknowledge trans er activity to non-academic users oresearch.

The aim o this report is to provide an overview o theextent to which the acts support these anecdotalcomments about the narrowly technocratic scope oaccounting research published in leading career-enhancingacademic journals. This overview is based on articlespublished in the six international academic peer-reviewedaccounting journals that are generally regarded as the

oremost o such journals. More speci cally, the researchanalyses the titles, abstracts and key words o all articlespublished in the six top-ranked accounting journals overthe 10-year period preceding the sub-prime crisis andcredit crunch – 1999 to 2008 inclusive. This analysis aimsto ascertain the scope o research published in each othese journals, especially since the collapse o Enron andWorldCom highlighted a need or research that examinesaccounting in a broader context.

The analysis thereby helps in providing preliminaryevidence o any signi cant gaps in existing ‘leading’accounting research. It should also be o use to the

accounting academic community in highlighting whether,and i so in what directions, accounting research needs tobroaden its areas o investigation to continue to serve theneeds o the societies that und this research. As it aims to

provide an initial overview o these issues, it will alsohighlight whether there are likely to be substantive issuesthat call or more in-depth investigation into the scope oacademic accounting research.

I the scope o articles published in ‘career-enhancing’accounting journals does not address the breadth osociety’s needs, then the editors o these journals haveclear choices to make. They may clearly articulate abroader editorial policy, and then actively seek a range oacademic work that addresses that broader policy.Alternatively, i they ail to broaden the scope o theresearch they publish, individual journals may risk losingtheir status as leading journals. The status o ‘leadingjournal’ is, in e ect, a status con erred by members o theacademic community. Editors o these journals should bein a power ul position to send signals through theireditorial policy that infuence perceptions o what isconsidered acceptable and good research. However, i they

ail to adapt their editorial policy to meet the changingneeds o societies in which academic researchers live, theeditors may nd that the academic community, infuencedby the practitioner and political/regulatory communities,no longer accepts that the research their journal publishescounts as ‘top quality’.

The next chapter o this report outlines the researchmethods that were used to record and analyse the data.This is ollowed by the analyses o the data on coveragewithin the six journals, annually over the 10-year periodconcerned, o a number o issues:

aspects o the traditional economic model underlying•

much accounting research

comprehensibility o accounting in ormation•

accounting or new types or orms o economic•

transaction

accounting or the social, societal and/or ecological•

impacts o organisations, and

the country or regional ocus o the articles.•

The nal chapter o this report summarises the key issuesemerging rom the data analysis, draws conclusions, andmakes recommendations or uture directions inaccounting research that can be drawn upon both by

unders o research and by the academic community.




2. METHODS

2.1 SAMpLE SELECTION

Providing an overview o the scope and prevalence otopics covered by research published in the leading

international academic peer-reviewed accounting journalsover the 10-year period 1999 to 2008 initially requiredidenti cation o those journals considered to be theleading ones during this period.

There have been numerous accounting journal rankingstudies. The ndings o 16 such studies covering theperiod 1984 to 2003 are synthesised by Bonner et al.(2006), who nd that the ollowing ve journals haveconsistently ranked (according to numerous di erentcriteria) as the oremost international peer-reviewedacademic journals in accounting:

Accounting, Organizations and Society • (AOS)

Contemporary Accounting Research• (CAR)

Journal o Accounting and Economics• (JAE)

Journal o Accounting Research• (JAR)

The Accounting Review • (TAR).

More recently, some journal rankings have placed Review o Accounting Studies (RAS) as one o the oremostaccounting journals; see or example the UK’s Associationo Business Schools’ journal quality listing (Kelly et al.

2009).

For the sake o completeness, this study has used the listprovided by Bonner at al. (2006) and supplemented it withReview o Accounting Studies , to give a list o the sixjournals (AOS, CAR, JAE, JAR, RAS and TAR) that arebroadly regarded as the top-ranked international peer-reviewed academic journals in accounting.

Focusing on an analysis o the contents o these sixjournals has advantages and limitations. For this study,which aims to provide an initial overview o the key issues,it was considered desirable to ocus on the leadingjournals that are o ten considered to be ‘career enhancing’,ie the journals in which many academics aspire to havetheir work published because this is considered to be amark o the highest-quality research, so success inpublishing in these journals can bolster careerprogression. Furthermore, the resources available toconduct an overview study o this nature are necessarilylimited. For practical purposes it was there ore necessaryto restrict the study to a relatively small number ojournals – and it was considered commonsensical to ocuson the oremost journals.

As in all research, limitations arise rom the choice osample. In this case, ocusing on just the six leadingjournals does not provide a picture o the high-qualityresearch that is published in other good-quality journals,

and that might cover a di erent balance o areas thanresearch published in these six leading journals. A morein-depth and extensive study may there ore be required toprovide a more comprehensive picture o the breadth ogood-quality academic research output, covering both the

oremost journals and other journals that have strongreputations but are ranked just below these leadingjournals.

2.2 DATA COLLECTION

Having identi ed the academic journals whose content wasto be analysed, the next stage in the research involveddownloading in ormation about every substantive articlethat had been published in each o these journals over the10-year period 1999 to 2008 (the last ull year be ore thisstudy was conducted in 2009). All articles were included inthe analysis other than articles in the orm o brie editorialcomments, notices o con erences, calls or papers, bookreviews and so on. The number o substantive articlesidenti ed per year or each o the six journals is shown inTable 2.1.

In ormation downloaded and analysed or each articlecomprised the title, keywords (where published) andabstract. The rationale or using these three items asproxies or the key topic(s) covered by each article was

that the abstract provides the author’s summary o theessential aspects o each article, and each author choosesboth a title and keywords that refect the article’s content.

As with any study where proxies are used, a key potentiallimitation o this study is the extent to which the words andphrases contained within the title, keywords and abstracto each article are a good proxy or the overall ocus o thearticle. It is possible that or some o the articles, the key

ocus may not be refected in the title, abstract or keywords. Nonetheless, as it is normal practice to refectthe main aspects o the article in the title, keywords andabstract, it was considered that or only a very smallnumber o articles (i any) would an analysis o the contento the title, keywords and abstract ail to refect the keyareas and topics covered by the article. Given that thewhole population o 1,961 articles has been analysed,there are none o the potential problems o sampling biasprevalent in many statistical studies. There ore, i the main

ocus o a small number o articles (out o the wholepopulation studied) was not refected in their title,keywords or abstract, this theoretical potential or an errorshould not materially a ect the overall picture obtained

rom the study.

The titles, keywords and abstracts or each o the 1,961articles were downloaded into an Endnote database library

le or subsequent analysis.

2. Met ods



10

Ta le 2.1: Total num er o articles downloaded

JOURnal 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Tot

Accounting, Organizations and Society (aOs) 33 37 32 31 30 34 33 31 31 43 335

Contemporary Accounting Research (caR) 32 28 30 26 28 34 37 34 44 36 329

Journal o Accounting and Economics (Jae) 43 29 18 15 47 27 26 33 34 42 314

Journal o Accounting Research (JaR) 36 31 35 57 34 33 28 34 37 44 369

Review o Accounting Studies (Ras) 15 17 20 24 25 23 21 24 25 24 218

The Accounting Review (TaR) 22 19 29 52 42 46 47 43 44 52 396

Total number o articles 181 161 164 205 206 197 192 199 215 241 1,961

2.3 DATA ANALySIS

The search acilities o Endnote were used to identi y thenumber o articles published each year in each o the sixjournals that contained speci c words or phrases relevantto the issues being investigated in this study. For eachspeci c word or phrase, each article was counted onlyonce however many times the word or phrase appeared inthe title and/or the keywords and/or the abstract. In otherwords, this study captures and analyses the number oarticles that re er to each topic (represented by eachsearch word or phrase) rather than analysing the numbero times a particular topic is mentioned across the wholesample. So i a search word or phrase is mentioned twiceor more in the title, keywords and abstract o an article,that article is still counted only once in the results o thedata analysis.

A total o 102 speci c search words or phrases wereidenti ed as relevant or investigating the topics o interestto this study. These words or phrases were identi edthrough a combination o a review o articles about the

accounting and economic implications and causes o thesub-prime crisis, credit crunch and global nancial crisis,as published in the pro essional accountancy press, the

nancial sections o leading newspapers, and academicjournals, along with brainstorming between the authors othis report and consultation with key sta at ACCA.

One limitation o this method is the extent to whichisolated word and phrase searches may have de-contextualised the comprehension o a narrative such asan abstract. It is possible to use more sophisticated searchand content analysis techniques than the acilities providedin Endnote, and this would have the potential to provide amore power ul and contextualised picture o the issuesaddressed by the journal articles analysed. For thisoverview study, seeking to maximise the research coverage

within a limited budget, it was considered that the Endnotesearch acilities allowed adequate analysis. Furthermore,automated word and phrase searches have been usedwithin quantitative content analysis studies published inmany o the leading peer-reviewed academic accountingjournals. This orm o content analysis is there ore atechnique that seems to be accepted as valid by theeditors o these journals and the accounting academiccommunity.

As noted in the introduction, the search words and phrasesanalysed or this project all into ve broad categories:

• aspects o the traditional economic model underlyingmuch accounting research

• comprehensibility o accounting in ormation

• accounting or new types or orms o economictransaction

• accounting or the social, societal and/or ecological

impacts o organisations

• country or regional ocus o an article.

The data or each o these ve broad categories arepresented and analysed in the next chapter o this report.There is a separate subsection or presentation anddiscussion o each o the ve broad categories. In eachsubsection a table is presented that shows, or each searchword or phrase in the le t-hand column, the number oarticles in total published over the 10-year period 1999 to2008 in each o the six leading journals, the total numbero articles published across all six journals, and thenumber o articles published in each year o the period oanalysis.




2. METHODS

Public awareness o the governance and accountingailures at Enron, WorldCom and other large rms grewrom late 2001 onwards. I this had motivated a change inocus o research in any area, one would expect this

change to have been refected in the articles publishedrom late 2003 or 2004. (This is because the time taken toresearch a new project, and go through a journal’s reviewand revision process, and the lead time rom acceptance othe revised paper to eventual publication is, in total, rarelyless than two years). There is there ore a ve-year periodbe ore 2004 in which the issues raised by Enron,WorldCom and the other large business ailures could notbe refected in the ocus o published research articles,and ve years rom 2004 when such a ocus wouldbecome apparent, i it existed. There ore, within theanalysis, any apparent change in the trend o ocus on anyparticular issue rom 2003 or 2004 has been commentedupon – although, as will be seen in the next chapter, theresults o this longitudinal analysis show little change inrelation to most o the issues examined.

When interpreting these tables, it should be noted that asmore than one o the di erent search words or phrasescan appear in any single article, the columns in the tablescannot be totalled as this could result in double counting.There ore no column totals have been given or any o thecategories o analysis.



12

3.1 ASpECTS OF ThE TRADITIONAL ECONOMIC MODELUNDERLyING MUCh ACCOUNTING RESEARCh

Table 3.1 summarises the number o articles that address

or ocus on a range o issues related to the moretraditional or orthodox economic ocus o accountingpractice and research. This ocus has dominatedaccounting research or approximately the last threedecades (Arnold 2009; Deegan and Unerman 2006) andhas attracted some criticism over several years or beingtoo narrowly ocused on technical accounting issues,without considering the broader societal impact oaccounting practices (Arnold 2009; McSweeney 2009).

Table 3.1 shows the most requent topic was audit , with atotal o 347 articles related to audit , auditing or auditors .There is no clear trend in the number o audit-relatedarticles over the period o analysis. CAR published the

highest number o audit-related articles (107 articles, or32.5% o articles published in the journal), with RASpublishing the ewest articles on this subject. Capturedwithin the requencies or the word audit are also articleson the more speci c topics o audit committee(s) andinternal audit (ors)/auditing – both shown lower down inTable 3.1. A total o 30 articles were ound to relate to audit committee(s) with only 11 ocusing on internal audit (ors)/ auditing . While there was an upward spike in the number o

3. Data anal sis

Ta le 3.1: Frequenc o articles related to traditional economic ocus o accounting ractice and researc

Word aOs caR Jae JaR Ras TaR Tot 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Audit (inc: auditor) 48 107 32 64 11 85 347 35 28 37 34 32 36 36 34 35 40

Risk 17 43 31 49 33 57 230 21 14 19 18 16 20 22 28 35 37

Earnings management 0 28 42 24 17 38 149 11 9 9 18 19 10 14 22 13 24

Regulation(s) 17 9 29 17 4 20 96 7 7 7 2 11 8 13 11 13 17

Agency 9 16 27 15 11 15 93 8 4 7 11 10 6 12 9 15 11

Governance 17 15 28 16 6 9 91 0 1 6 9 6 11 7 23 14 14

Shareholder(s) 7 13 15 19 11 16 81 6 8 5 9 8 8 8 8 6 15

Value relevance/relevant 1 6 17 12 10 21 67 5 8 5 8 14 6 5 3 6 7

Agent 11 14 5 13 12 7 62 2 12 7 10 2 5 5 7 6 6

Corporate governance 5 12 21 11 5 7 61 0 1 4 5 2 8 6 16 12 7

Bank(s)/Banking 6 11 9 11 6 15 58 3 4 5 4 5 9 5 10 3 10

Audit committee(s) 2 10 2 6 0 10 30 0 1 1 5 3 2 8 2 4 4

Compliance 6 5 6 5 0 8 30 3 3 2 2 3 2 2 3 4 6

Fair value 0 5 3 7 3 7 25 1 3 1 1 0 1 1 7 4 6

Con dence 3 4 2 6 2 2 19 3 2 0 1 3 1 2 2 1 4

Liquidity 0 2 5 9 2 1 19 2 3 1 2 2 0 3 1 0 5

Internal audit 2 5 0 2 0 2 11 0 1 3 0 1 1 1 1 1 2

Sel -interest 4 1 1 1 1 3 11 1 0 1 1 0 2 1 1 0 4

Risk management 2 1 2 2 1 1 9 3 1 0 2 1 0 0 0 1 1

Stewardship 2 2 0 5 0 0 9 1 0 0 2 1 2 0 1 1 1Business model/modelling 2 2 0 1 1 2 8 0 0 0 0 1 0 1 2 3 1

Shareholder value 2 1 0 2 1 0 6 0 0 0 0 0 0 2 2 0 2

Basel 0 3 0 0 1 0 4 0 0 0 0 0 2 0 0 2 0

Going concern 0 1 2 1 0 0 4 0 1 0 1 0 0 1 0 1 0

E cient market(s) 0 0 0 2 0 0 2 0 0 1 1 0 0 0 0 0 0

Capital adequacy 0 0 1 0 0 0 1 1 0 0 0 0 0 0 0 0 0Remuneration (inc:auditor rem) 0 0 1 0 0 0 1 0 0 0 1 0 0 0 0 0 0

Cash fow management 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Investment appraisal 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Investor perspective 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Market ailure 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Stress testing 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Supervision 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0




3. DATA ANALYSIS

articles related to audit committee(s) in 2005 (post Enron),there was no apparent upward or downward trend in the

requency o audit articles more broadly.

Other popular themes in the area o a traditional economicocus were risk , with a total requency o 230 articles and anoticeable upward trend in requency a ter 2005 –possibly indicating a slightly delayed Enron e ect due toextended times to complete research; earningsmanagement , with a total requency o 149 articles and noclear trend in requency over time; regulation(s) , with atotal requency o 96 articles and a marginal increase in2005 post Enron; agency , with a total requency o 93articles and no clear trend in requency over time, andgovernance , with a total requency o 91 articles and agenerally upward trend in requency rom 2006 – sometime post Enron. Included within the governance

requencies is the more speci c term corporate governance ,which Table 3.1 shows had a requency o 61 articles anda very clear upward spike in requency in 2006 and 2007.

A topic o particular interest, given the role o banks in thesub-prime crisis, and subsequent public comments on thecomplexity o bank balance sheets, is the number oarticles that ocused on this key sector o the economy.Table 3.1 shows that only 58 articles ocused on banks orbanking (the Endnote search or bank incorporated alsobanks and banking ), with no clear trend over time or withinthe journals that published papers on this topic. Fair value ,another topic implicated by some in the credit crunch, wasthe ocus o only 25 papers, and the topic o stewardship

eatured in only nine articles.

Perhaps surprisingly, given its dominance in the businessand nancial press over the period o analysis, the termshareholder value was a ocus o only six articles (althoughthe broader term value relevance or value relevant was a

ocus in 67 articles), and the e ciency o markets (a keyassumption underlying mainstream orthodox accountingtheories) was the ocus o only two articles. This is a clearindication that this key assumption underlying mainstreamaccounting research, and one that was very publiclydiscredited in the wake o the credit crunch, was not beingactively evaluated through leading academic accountingresearch during the 10 years leading up to the creditcrunch. This could lend plausibility to anecdotal commentsregarding the unquestioning aith that many mainstreamaccounting researchers placed in the economics-basedassumptions underlying their models. It has been arguedin light o events since the credit crunch that thisunquestioning aith had been misplaced. To the extent thatthese arguments are plausible, they indicate that manyinsights rom orthodox accounting research may not havebeen particularly e ective in discharging the academy’sresponsibilities to society, i they were based on fawedeconomic models . In the words o Adair Turner, the Chairo the UK banking regulator, the Financial ServicesAuthority (FSA):

we have had a very undamental shock to the ‘e cient market hypothesis’ which has been the DNA o the FSAand securities and banking regulators throughout the

world. The idea that more complete and more liquidmarkets are de nitionally good and the more o them wehave the more stable the system will be, that wasasserted with great con dence up to three years ago.

(Prospect 2009)

An omission rom Table 3.1 is the term market or markets .A search or this term revealed a total o 588 articlesrelated to this topic. Even so, as the words market andmarkets , sometimes in combination with other words, covera broad range o topics, it was considered that the resultso this search or the word market(s) were too broad to bemeaning ul. Similarly, a search using the term capital resulted in a total o 323 articles with this word in theirtitle, keywords and/or abstract. Perusal o the resultsshowed a wide variety o uses o capital – or example aspart o the terms ‘capital expenditure’, ‘share capital’, ‘costo capital’, ‘capital management’, ‘capital market’, ‘capitalstructure’, ‘capitalize’, ‘capitalization’ and so on. Given thisbroad range o issues indicated by the word capital it was

elt that using the data rom this search would not bemeaning ul. Another omission rom Table 3.1, or similarreasons, is the term value . This resulted in a total o 370articles covering a diverse range o topics such as ‘valuerelevance’ (analysed separately in Table 3.1), ‘book value’,‘ air value’ (also analysed separately in Table 3.1), ‘marketvalue’, ‘ undamental value’, ‘value-to-price ratio’, ‘assetvalues’ and so on.

O the 10 highest- requency economics- ocused topics/issues identi ed in Table 3.1, other than articles related to

audit (which are discussed above):

AOS published the lowest number o articles on the•

seven topics o : risk, earnings management, agency,shareholder(s), corporate governance (lowest equal withRAS), value relevance , and bank(s) (lowest equal withRAS)

CAR published the highest number o articles related to•

the topic: agent

JAE published the highest number o articles related to•

the ve topics: earnings management, regulation,agency, governance and corporate governance , and the

ewest articles related to: agent

JAR published the highest number o articles related to•

the topic: shareholder(s)

RAS published the lowest number o articles on the•

our topics o : regulation, governance, corporategovernance (lowest equal with AOS), and bank (lowestequal with AOS)

TAR published the highest number o articles related to•

the three topics o : risk, value relevance/relevant , andbank(s) .



14

3.2 COMpREhENSIbILITy OF ACCOUNTINGINFORMATION

Table 3.2 summarises the numbers o articles that have

addressed the comprehensibility o accountingin ormation. This is an important issue in the context oincreasingly complex accounting in ormation resulting

rom complex transactions and disclosure standards. Thiscomplexity is an issue that has been highlighted by someas reducing the clarity o nancial statements to manyusers.

In contrast to the number o articles examining aspects othe traditional economic ocus o accounting practice andtheory (as discussed in the previous subsection), Table 3.2shows that relatively ew articles ocus on issues related tothe comprehensibility o accounting in ormation. Thehighest number o articles in this broad area relate toaccuracy , with a total o 73 articles over the period and noclear upward or downward trend in annual requency overthe period. JAR published the largest number o articlesrelated to accuracy , at 27 articles, and RAS published thelowest. The results in Table 3.2 or accuracy include a totalo 35 articles on the narrower and more technicaleconomic- ocused area o orecast accuracy (shownseparately), so the number o articles ocusing on thebroader issue o the accuracy o accounting in ormationwas only marginally more than hal o the 73 articlesrelated to accuracy overall.

The second most requent issue in the broad area ocomprehensibility were articles ocusing on complex/ complexity , with 61 articles ocusing on this issue. Thecoverage o this topic was spread airly evenly over each

year o the period o analysis, other than an upward spikein 2007, in which year ve articles in AOS and three ineach o CAR, JAE and TAR ocused on this issue. Over thewhole period, AOS and TAR had a much higher coverage oissues o complex accounting and complexity than theother our journals (RAS did not cover this topic at all).Sixty articles ocused on issues o in ormation asymmetry ,with a similar pattern o annual requencies to that or thetopic complex/complexity, and a spike in 2007 – caused inthis case by increased coverage across all journals otherthan AOS. Conversely to the coverage o the words complex and complexity , that o in ormation asymmetry was airlyevenly spread across all journals with the exception oAOS, which published only one article related to this topic.Issues o transparency were the ocus o only 32 articles,with 12 o these published in JAR and eight in TAR. Thereappears to have been an increase in ocus on this topicpost Enron, with 10 articles published in 2004 and nine in2006 (although there were none in 2005).

Perhaps surprisingly, only eight articles ocused explicitlyon Enron and only one directly mentioned the wordcomprehensibility . No articles ocused on true and air although this could be because this term is a UK termrather than a global one, so not one that might beexpected to appear in a non-UK- ocused article.


Accuracy 3 17 11 27 2 13 73 11 11 7 3 10 2 7 9 7 6

Complex(ity) 22 9 7 7 0 16 61 3 6 4 7 5 5 6 4 14 7

In ormation asymmetry 1 12 14 13 7 13 60 5 6 4 6 4 5 4 7 13 6

Forecast accuracy 0 4 7 14 1 9 35 5 2 3 2 7 0 4 4 3 5

Transparency 2 4 5 12 1 8 32 0 0 0 2 3 10 0 9 4 4

Balanced scorecard 6 1 0 1 0 4 12 0 1 0 1 3 2 1 0 3 1

Transparent 2 0 2 2 2 3 11 0 0 0 0 1 3 1 2 1 3

Enron 2 3 1 1 0 1 8 0 0 0 1 2 0 1 1 1 2

Comprehensible/ility 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 1 0Prospective per orm.indicators 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

True and air 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Ta le 3.2: Frequenc o articles related to t e com re ensi ilit o accounting in ormation




3. DATA ANALYSIS

3.3 ACCOUNTING FOR NEW TypES OR FORMS OFECONOMIC TRANSACTION

Table 3.3 summarises the articles that related to

accounting or new types or orms o economictransaction. This is a key issue as several new orms ocomplex nancial instrument, increasingly developed sincethe early 1990s, have been blamed by somecommentators or precipitating the global nancial crisis.Accounting has needed to adapt to communicate thesenew types o economic transactions adequately, both sothat accounting reports could help to provide transparencyand so that senior executives and non-executive directorscould discharge their own governance duties e ectively in

ull knowledge o the activities and risks o the rm.

As this study has examined articles in leading accountingjournals, the analysis in this chapter does not comment onthe extent to which the new orms o economic transactionwere, or were not, covered in academic nance research aspublished in nance journals. It speci cally investigatesthe extent to which, in the period considered, leadingaccounting journals carried articles that explicitly helpedto develop, and/or critiqued, the manner in which thesenew orms o transaction were communicated to

stakeholders through nancial statements. This can beregarded as a key opportunity that the academicaccounting community had to serve the needs o businessand investors by investigating whether new complex orms

o transaction were communicated in the most e ectivemanner.

Table 3.3 shows that very little research published in theleading international peer-reviewed accounting journalsover the 10-year period 1999 to 2008 ocused onaccounting aspects o the new orms o economictransaction that may have caused or exacerbated thesub-prime crisis and credit crunch. A total o 27 articlesrelated to the longer-standing and broader issue oleverage or leveraged transactions. Only 11 ocused onderivatives , with only three ocusing on of balance sheet issues that were so clearly demonstrated to beproblematic, in accounting terms, ollowing the collapse oEnron in 2001. There were no articles ocusing onaccounting aspects and problems o the new orms ocomplex transaction such as: asset-backed securities,collateralised debt obligations, nancialisation, mortgage-backed securities, securitisation, special purpose entities , orstructured investment vehicles .

Ta le 3.3: Frequenc o articles related to accounting or new t es or orms o economic transaction


Leverage(d) 0 5 4 12 5 1 27 2 3 3 1 1 2 4 2 7 2

Derivatives 1 0 2 2 2 4 11 2 2 1 1 0 1 1 1 1 1Adequacy (inc: capitaladeq) 1 0 1 1 0 0 3 1 0 0 0 0 1 1 0 0 0

O balance sheet 0 0 1 2 0 0 3 0 0 0 0 0 0 2 1 0 0

Asset-backed securities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Collateralised debtobligations 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Financialisation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Mortgage backedsecurities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Securitisation 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Special purposeentities 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0Structured investmentvehicle(s) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0



16

3.4 ACCOUNTING FOR ThE SOCIAL, SOCIETAL AND/ORECOLOGICAL IMpACTS OF ORGANISATIONS

This subsection moves on to analyse the extent to which

articles published in the oremost accounting journals tooka broader perspective on the role o accounting. This is thearea o how well accounting refects, or could refect, thesocial, societal and/or ecological impacts o organisationalactivities, and how accounting can help providein ormation to mitigate negative externalities in theseareas. Table 3.4 shows the data in relation to these issues.

The most common topic in this category comprised 98articles ocusing on social , spread reasonably evenly overthe period o analysis and predominantly ound in AOS(with 71 out o the 98 articles). A similar pattern applied tothe articles related to pro essional (86 articles in total),society (41 articles – all but one o which were in AOS),political (29), accountability (28), and trust (25).

Although 127 articles related to the word environment , thisword can be used in a number o non-ecological contexts(such as the manu acturing environment , the politicalenvironment , and so on), which it was not possible toexclude using the Endnote search so tware, and so thissearch term has been excluded rom Table 4.4. A morespeci c search or articles related to the termenvironmental (all o which articles will also be included inthe requency o articles related to the word environment )

ound only 24 such articles. These were spread reasonablyevenly over the period o analysis, predominantly in AOS

(with 15 out o the 24 articles).

The word moral is covered in 31 articles, but 18 o thesedeal with more traditional orthodox economics-orientedissue o moral hazard , leaving only 13 articles ocusingexplicitly on broader social issues o morality (10 o thesewere in AOS).

The 46 articles related to reputation were more evenlyspread between the journals. This is the exception in thebroad category o articles examining the accounting-related social, societal, and/or ecological impacts o

organisational activities. A perusal o Table 3.4 showsclearly that these articles were predominantly published inAOS, with many important issues not covered at all by anyo the other journals, or covered only in a very smallnumber o articles in one or two o the other journals.More speci cally, out o the 10 highest- requency articlesrelated to topics in the broad area o the social, societal orecological impact o accounting:

AOS published the highest number o articles related to•

eight o the topics: social, pro essional, society, moral,political, accountability, trust and environmental

CAR published the highest number o articles on•

reputation , and the lowest number o articles related tothe one topic o society (at zero articles, lowest jointlywith JAE, JAR and RAS)

JAE published the lowest number o articles on• social (lowest jointly with RAS), society (at zero articles, lowestjointly with CAR, JAR and RAS), accountability (at zeroarticles, lowest jointly with RAS), and environmental (atzero articles, lowest jointly with RAS)

JAR published the lowest number o articles on• society (at zero articles, lowest jointly with CAR, JAE and RAS)

RAS published the lowest number o articles on the•

seven topics o : social (lowest jointly with JAE),pro essional, reputation, society (at zero articles, lowestjointly with CAR, JAE and JAR), accountability (at zeroarticles, lowest jointly with JAE), trust , andenvironmental (at zero articles, lowest jointly with JAE)

TAR published the lowest number o articles on the two•

topics moral and political .




3. DATA ANALYSIS

Ta le 3.4: Frequenc o articles related to accounting or social, societal and/or ecological im acts o organisations


Social 71 9 1 4 1 12 98 4 10 14 11 10 8 10 10 8 13

Pro essional 48 17 4 3 1 13 86 5 6 11 7 7 8 13 7 9 13

Reputation 4 16 7 12 2 5 46 3 2 3 6 1 5 6 8 4 8

Society 40 0 0 0 0 1 41 5 0 0 6 7 4 3 4 7 5

Moral 10 6 5 4 5 1 31 3 3 5 5 3 5 2 2 1 2

Political 19 1 5 3 1 0 29 2 0 4 0 1 5 2 6 5 4

Accountability 19 4 0 2 0 3 28 2 1 3 4 0 6 1 5 3 3

Trust 11 3 3 3 0 5 25 5 1 1 1 2 4 3 3 2 3

Environmental 15 2 0 1 0 6 24 2 2 2 1 0 3 3 3 3 5

Wel are 3 0 3 2 4 8 20 3 4 2 3 0 1 2 0 1 4

Engagement 5 7 0 2 0 5 19 1 0 2 2 1 3 2 3 2 3

Moral hazard 0 3 5 4 5 1 18 2 3 3 3 3 1 1 1 0 1

Responsibility 6 4 3 0 0 5 18 1 3 1 2 3 0 1 3 1 3

Stakeholder(s) 10 4 1 1 0 2 18 0 2 1 4 0 1 4 1 1 4

Trans er pricing 3 1 2 1 7 4 18 3 3 2 1 0 2 0 5 1 1

Legitimacy 10 1 0 0 0 0 11 0 0 0 0 1 1 0 3 3 3

Politics 10 0 1 0 0 0 11 0 0 2 1 1 2 0 0 2 3

Responsible 2 4 2 1 0 2 11 1 1 1 0 2 0 1 0 3 2

Unethical 2 0 9 0 0 0 11 1 2 3 1 1 0 0 0 1 2

Ethical 7 0 0 0 0 1 8 1 0 0 1 0 3 0 0 0 3

Honest(y) 0 3 0 0 0 4 7 0 0 1 1 0 0 0 1 2 2

Democratic 6 0 0 0 0 0 6 1 0 0 0 0 1 2 1 1 0

Empowerment 5 0 0 1 0 0 6 2 0 0 1 0 0 0 0 0 3

Ethics 4 2 0 0 0 0 6 0 0 1 1 0 1 1 0 1 1

Sustainability 2 0 0 0 1 1 4 0 0 0 0 0 0 1 0 2 1

Democracy 2 0 0 0 0 0 2 0 0 0 1 0 0 1 0 0 0

Sustainable 0 1 0 0 1 0 2 0 0 0 0 0 0 1 1 0 0

Legitimation 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 1 0

Tax evasion 0 0 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0

Carbon 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Dishonest 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Malpractice 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Money laundering 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Stakeholder perspective 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0



18

3.5 ThE COUNTRy OR REGIONAL FOCUS OF ANARTICLE

The nal area o analysis in this report is the geographical

coverage o the articles published in the leadingaccounting academic journals. Data or this are shown inTable 3.5. A sample o countries and regions was selected

or analysis, partly on the basis o anecdotal commentsregarding the prevalence o speci c national oci withinaccounting research, and partly because o a desire toprovide a good sample coverage o both key and emergingeconomies. Thus, or example, the emerging economies othe so-called BRIC countries o Brazil, Russia, India andChina were included in the analysis.

Out o the total o 1,961 articles analysed or this study,Table 3.5 shows that only a relatively small proportionmentioned, in their title, abstract or keywords, anyparticular country or region rom the countries andregions that were selected or analysis. O those that did,by ar the largest requency (148 articles) related to theUS , with Canada second (33 articles) and the UK third (31

articles). It should be noted that CAR is a society journal othe Canadian Academic Accounting Association, so wouldbe expected to contain a number o articles ocusing onCanadian accounting practices. O the articles ocusing on

countries or regions outside the US, AOS published by arthe largest number.

There were very ew articles ocusing on the emergingpotential economic powerhouses o Brazil (0 articles),Russia (1 article), India (5 articles) and China (19 articles).O these, again by ar the most were in AOS.

As noted in the methods chapter earlier, the requenciesgiven in the data tables are not additive down any o thecolumns. So, or example, an article ocusing on the USand Canada and mentioning North America also in its title,keywords or abstract, would provide a count o 1 undereach topic o US , Canada and America .

The data in Table 3.5 lend support to anecdotal commentson the parochial nature o the US-based leading peer-reviewed accounting journals – JAE, JAR, RAS and TAR.


US or U. S. 33 28 15 31 6 35 148 9 13 9 16 16 22 10 15 17 21

Canada/Canadian 14 12 0 3 0 4 33 1 3 5 4 4 4 3 3 4 2

UK or U. K. 12 3 9 3 0 4 31 3 3 1 3 1 8 5 0 4 3

America(n) 11 5 1 3 0 3 23 3 1 4 1 4 3 0 3 1 3

China/Chinese 10 3 2 1 1 2 19 2 3 1 0 0 3 2 2 2 4

Europe(an) 6 0 0 4 0 1 11 1 1 1 1 0 2 2 2 0 1

German(y) 4 0 1 5 1 0 11 0 5 1 0 2 0 0 0 1 2

Japan(ese) 4 2 2 2 0 0 10 1 2 1 1 1 1 0 0 2 1

Asia 1 0 2 5 0 0 8 0 0 1 1 1 2 1 1 0 1

A rica 5 0 0 0 0 0 5 0 1 1 1 1 0 0 1 0 0

India(n) 5 0 0 0 0 0 5 1 2 0 0 1 0 0 1 0 0

Russia 1 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 1

Brazil 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Ta le 3.5: Frequenc o articles related to s ecifc regions or countries




4. SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Figure 4.1 shows the total number o articles each year,over the whole 10-year period, that covered each o the

ve most requently addressed topics in each o the ‘topic’categories. This graph does not include data rom the

country or regional category as this ocuses on the placeto which research relates whereas the other categories areall concerned with data about topics covered within thearticles.

Figure 4.1: Total num er o articles eac ear across t efve most requent to ics in eac categor

The data presented in Chapter 3, and summarised inFigure 4.1, clearly show that the dominant ocus o articlespublished in the six leading international academic peer-reviewed accounting journals in the 10-year period 1999to 2008 has been on the traditional accounting orthodoxyo the last three decades – the economic role oaccounting. This result in itsel is not surprising, as it wouldbe expected that the largest number o articles in topaccounting journals should ocus on issues related to thedominant paradigm in accounting research.

What is surprising is the almost exclusive ocus in severalo the leading journals on a narrow range o technocraticaspects o the economic unctioning o accounting. While itis reasonable or these journals to publish many articleswith this ocus, it may not be healthy or the uture oaccounting practice or them to publish so ew articles thateither ocus on issues that challenge the dominantassumptions underlying accounting theory and practice, orseek to provide insights to help develop accountingpractices in ways that may serve the broader and changingneeds o society. Accounting is a dynamic practice, andresearch needs to adapt to refect changing practices and

contexts rather than adopting a narrow and xed view owhat constitutes accounting. In the words o AnthonyHopwood, in his Presidential Scholar plenary address to the2006 American Accounting Association annual meeting:

140

120

100

8060

40

20

0number of articles per category

2 0 0 8

2 0 0 7

2 0 0 6

2 0 0 5

2 0 0 4

2 0 0 3

2 0 0 2

2 0 0 1

2 0 0 0

1 9 9 9

Traditional economic ocus

Social, societal and/or environmental impact

Comprehensibility

New orms o economic transaction

4. Summar , conclusions and recommendations

There were…there have been…and there are now peoplewho think that they know what accounting, and auditing

or that matter, is. How wrong these people are. They arethe ones who list the attributes o the status quo, seemingly

wanting to con ne the new to being within the boundarieso the old. They have no conception that accounting andaccounting research have repeatedly changed acrosstime, and when things change they become what they were not, at least in part. Accounting has been a cra t that has had no essence. It has changed signi cantly across time, adopting new orms, methods, and roles.Likewise or accounting research. Historically, it too hasdeveloped in relation to a diverse series o circumstancesand pressures, taking on diferent orms in diferent places and at diferent moments o time, repeatedly adopting approaches that were novel and contentious.Moreover, both accounting and accounting research willcontinue to do just that, regardless o the pleas andeforts o those who act in the name o the status quo.Indeed the very role o accounting research is in part tomake both accounting and our knowledge o it diferent,to move orward our understandings o accounting and, at times, the practice o accounting itsel . (Hopwood 2007)

Contrary to this broad and dynamic role o accountingresearch, the analysis in Chapter 3 indicates that anarrowly ocused approach to research dominates thearticles accepted or publication in most o the career-enhancing leading journals. It may be considered to be oparticular concern that very little research published inthese articles ocuses on an examination o the accounting

issues associated with new orms o nancial andeconomic transaction that were so spectacularlyimplicated in the events leading up to the sub-primebanking crisis and ensuing credit crunch and global

nancial crisis. It appears that these leading journals didlittle o consequence to encourage researchers to deviate

rom a dominant narrow technocratic ocus to look at theproblems caused by, and potential solutions to, the lack otransparency and comprehensibility in accounting orthese new and highly material orms o transaction.

It was publicly demonstrated in the a termath o the collapseo Enron, WorldCom and other major corporate ailures in2001 and 2002 that accounting plays a very importantrole in society, and that accepted accounting practiceswere not unproblematic. The challenges this posed to theaccounting pro ession, to the economy and to society morebroadly (Unerman and O’Dwyer 2004) should have alertedthe accounting academy to a need to move away rom analmost exclusive ocus on narrow technocratic accountingresearch, and encourage research into the broader societalimpacts o accounting (including a lack o transparencyand comprehensibility or the new and highly material

orms o economic and nancial transaction). The range oresearch published in most o the six oremost journalssince the collapse o Enron, WorldCom and other companiesdoes not appear to have moved towards recognition o the

need to evaluate critically the assumptions underlyingdominant paradigms and theories in accounting practiceand research, or to provide insights to help develop novelaccounting practices in areas that are needed by society.



20

This indicates that Elliott’s criticism o the ocus o economistsin the wake o the sub-prime crisis and ensuing credit crunchcould apply equally to many in the accounting academy:

As a pro ession, economics [or, in our case, accounting] not only has nothing to say about what caused the worldto come to the brink o nancial collapse last autumn, but also a supreme lack o interest in it. (Elliott 2009)

The exception to this narrow technocratic ocus is AOS.While AOS has published a range o papers ocusing onissues related to the dominant economics-basedparadigms and theories in accounting practice andresearch, it has also published a substantial number oarticles ocusing on a range o broader issues that canhelp to critique accounting practice (and dominantparadigms and theories in accounting research)constructively and contribute towards the development oaccounting practices in new areas.

As noted in the introduction, the status o a journaldepends largely upon the perceptions o members o theacademic community. I su cient members o theacademic community decide that the research publishedin a particular journal is no longer particularly relevant,then i the editors o that journal do little that e ectivelyencourages submissions o papers in those areas that theacademic community considers to be more relevant, thereputation o the journal will su er and its ranking willdecline. I su cient academics become aware o pressure

rom the broader society or a change in ocus (through,

or example, their interactions with accountingpractitioners and regulators), they may begin to exertpressure on editors and editorial boards to change andbroaden their ocus away rom the prevalent narrowtechnocratic ocus. I editors are not proactive inidenti ying or themselves broader and changing societalneeds, or do not reactively recognise or act upon thesepressures rom academics then, in their ‘rankings’ oworld-class journals, academics may simply start tosubstitute other high-quality journals that do publish abroader range o research.

There is some evidence that this phenomenon is occurring.At the beginning o 2010, or example, a peer-developedjournal ranking or use by the Australian government inevaluating the quality o university research, included thebroadly based Accounting, Auditing and Accountability Journal as a top-rated international journal. The sameranking exercise placed some o the more orthodoxjournals, regarded as top quality among many‘mainstream’ accounting researchers, lower in therankings. While many ‘mainstream’ accountingresearchers may not have understood how a more broadlybased accounting journal such as Accounting, Auditing andAccountability Journal could be placed so highly while‘their’ journals were placed lower in the rankings (thisissue was the subject o some lobbying a ter the rankings

were published), this incident may demonstrate thatmainstream researchers need to broaden their criteria orwhat counts as high-quality research or riskmarginalisation o the journals that publish their work.

Most accountants will be aware o a basic insight on riskrom nance theory: an undiversi ed port olio is a high-

risk port olio. The accounting academy, especially theeditors o leading journals, need to apply this insight to the

port olio o accounting research activities and outputs.Where the port olio o research is tightly ocused on anarrow range o theoretical bases, there is a signi cant riskto the credibility o the accounting academy (and/or toindividual narrowly ocused journals) i the credibility othe undamental assumptions underlying these theoriesare brought into question – as was the case in the wake othe credit crisis with the undamental assumptionsunderlying much o the current orthodoxy o accountingresearch. A well-diversi ed port olio o research theories,with a resultant well-diversi ed port olio o underlyingassumptions, reduces considerably these risks to theacademy or to individual journals. With such diversi cation,i the assumptions underlying one type o theory are oundto lack credibility, other published research will haveprovided su cient research insights to maintain the overallcredibility o the academy and o individual diversi edjournals. The data analysed in this report indicate that thisnecessary diversi cation o research is absent rom mosto the leading international academic peer-reviewedjournals in accounting, with the notable exception o AOS.

So a key recommendation rom the research presented inthis report is that or the uture health o the accountingacademy and o individual leading journals, more o thesejournals need to encourage the conducting, submissionand publication o a broader range o accounting research.

This is important i they want to reduce the risk thataccounting research will lose credibility i it is no longerseen to serve the needs o the societies that und thisresearch. Recent changes to the editorial practices andcomposition o the editorial board o CAR indicate a moveto such broadening by this leading Canadian journal. Butthe US-based journals show little, i any, recognition o theneed to broaden their scope i they are to retain their status.

The insights provided in this report are based on apreliminary overview study. The key limitations fowing

rom the methods that have been employed to provide agood-quality overview have already been noted in theintroduction and the methods chapter. To address theselimitations, a uture in-depth study should be conducted.Several high-quality journals, other than the top sixjournals whose content has been analysed in this report,aim to publish a broad scope o research. There ore animportant uture extension o this research is an in-depthstudy to extend the research to a greater number ojournals, using methods that permit more re nedcontextual searches (possibly including whole articlecontent). This would enable an even more e ectivejudgement o risks to the health o the accountingacademy, and an identi cation o which o the morebroadly based high-quality second-tier journals are in astrong position to displace some o the journals currently

perceived as ‘ oremost’, i the latter ail to be e ective inencouraging and implementing the necessarydiversi cation in accounting research.




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Deegan, C. and Unerman, J. (2006), Financial Accounting Theory: European Edition (Maidenhead: McGraw Hill).

Elliott, L. (2009), ‘It’s a Funny Old Game: Where is theDream Team o Economists to Tackle the Slump?’, TheGuardian , London, 1 June: 22.

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ACCA Relevance of accounting research 2010

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