Equity theories and financial reporting: past, present and future

This paper has three aims. Firstly, to remind accounting academics, practitioners and standard setters of the origins and the substance of the equity theories and the debate surrounding them that took place from the late 19th century until the 1970s. Secondly, it seeks to understand why the equity theories do not play a role in current financial accounting and reporting theory, regulation and practice. It argues that never in history has there been a greater need to pick up the search for a comprehensive theory of financial accounting because international financial reporting standards are a reality in today’s world, and their development is in the hands of the International Accounting Standards Board (IASB). Thirdly, it sketches the outline of a possible comprehensive theory of financial accounting and explains what we can and cannot expect from such a theory. We need a comprehensive theory of accounting because we need to improve our understanding of how different viewpoints of the publicly held corporation might impact income determination models and disclosure and valuation paradigms, and of the economic and social consequences that accounting and reporting according to the different viewpoints may have. Assuming that the IASB truly has the international public interest in mind, such understanding might impact the IASB Conceptual Framework and international financial accounting and reporting standards in the future

‘I understood the words but I didn’t know what they meant’: Japanese online MBA students’ experiences of British assessment practices

We report on a case study of high Japanese student failure rates in an online MBA programme. Drawing on interviews, and reviews of exam and assignment scripts we frame the problems faced by these students in terms of a ‘language as social practice’ approach and highlight the students’ failure to understand the specific language games that underpin the course assessment approach. We note the way in which the distance learning and online context can make the challenges faced by international students less immediately visible to both students and institution

The public interest in international financial accounting, reporting and regulation

[About the book] Financial accounting, reporting and regulation is a vast subject area of huge global importance, with interest rising significantly in the light of the ongoing global financial crisis. The authors begin with a broad overview of the subject of accounting, setting the stage for a discussion on the theoretical and practical issues and debates regarding financial reporting, which are expanded on in the second part of the book. This includes how to define the reporting entity, recognition and measurement of the elements of financial statements, fair values in financial reporting and the costs and benefits of disclosure. The third part assesses the interest, need and theories behind the accounting, reporting and regulation industry, while parts four and five look at the institutional, social and economic aspects; with issues such as accounting for environmental management and, accounting regulation and financial reporting in Islamic countries, both issues of ever increasing importance. This authoritative Companion presents a broad overview of the state of these disciplines today, and will provide a comprehensive reference source for students and academics involved in accounting, regulation and reporting

The equity theories and financial reporting: an analysis

This paper reviews accounting literature in the English language on proprietary and entity theory in order to understand their implications for financial accounting and reporting. Although there is a lack of agreement on the definition and accounting implications of the various equity theories, the literature indicates clear differences between pure proprietary and pure entity perspectives of the firm. These differences particularly relate to the purpose of accounting and financial reporting, the distinction between debt and equity and its accounting implications for the analysis and recording of transactions and recordable events, and the definition, determination, disclosure and distribution of income. The main contribution of this paper is twofold. First, it explains in operational terms why an entity perspective of the company is theoretically irreconcilable with the asset-liability approach to the determination of income. Second, it makes clear that there is always an implicit perspective to financial reporting. Inconsistency in accounting standards results if the implicit perspective is not the same as the perceived focus of decision-usefulness

Methodology in financial accounting theory

[About the book] Financial accounting, reporting and regulation is a vast subject area of huge global importance, with interest rising significantly in the light of the ongoing global financial crisis. The authors begin with a broad overview of the subject of accounting, setting the stage for a discussion on the theoretical and practical issues and debates regarding financial reporting, which are expanded on in the second part of the book. This includes how to define the reporting entity, recognition and measurement of the elements of financial statements, fair values in financial reporting and the costs and benefits of disclosure. The third part assesses the interest, need and theories behind the accounting, reporting and regulation industry, while parts four and five look at the institutional, social and economic aspects; with issues such as accounting for environmental management and, accounting regulation and financial reporting in Islamic countries, both issues of ever increasing importance. This authoritative Companion presents a broad overview of the state of these disciplines today, and will provide a comprehensive reference source for students and academics involved in accounting, regulation and reporting

The IASB and the public interest

According to the IFRS Foundation’s Constitution, the IASB develops its Conceptual Framework and IFRS in the public interest. This paper analyses the IFRS Constitution and the IASB Conceptual Framework to investigate how the IASB interprets 'the public interest' with respect to the purposes of accounting and reporting regulation. It argues that prioritising usefulness for making economic decisions over the protection and reconciliation of conflicting economic interests does not support legitimacy of the IASB’s claim to the public interest in an international environment characterised by great institutional diversity. This paper explores how the Conceptual Framework could reconcile the economic and social functions of accounting in order to serve the public interest across national, ideological and institutional boundaries

Fundamental issues in financial accounting and reporting theory

[About the book] Financial accounting, reporting and regulation is a vast subject area of huge global importance, with interest rising significantly in the light of the ongoing global financial crisis. The authors begin with a broad overview of the subject of accounting, setting the stage for a discussion on the theoretical and practical issues and debates regarding financial reporting, which are expanded on in the second part of the book. This includes how to define the reporting entity, recognition and measurement of the elements of financial statements, fair values in financial reporting and the costs and benefits of disclosure. The third part assesses the interest, need and theories behind the accounting, reporting and regulation industry, while parts four and five look at the institutional, social and economic aspects; with issues such as accounting for environmental management and, accounting regulation and financial reporting in Islamic countries, both issues of ever increasing importance. This authoritative Companion presents a broad overview of the state of these disciplines today, and will provide a comprehensive reference source for students and academics involved in accounting, regulation and reporting

The Equity Theories and the IASB Conceptual Framework

The International Accounting Standards Board (IASB) staff members ‘recommend that the IASB confirm its view that financial statements should be presented from the perspective of the entity as a whole’ [IASB (2014) Agenda Paper 10E Project – The Conceptual Framework. Reporting Entity – Perspective. London: The International Accounting Standards Board. May 2014. Available at: http://www.ifrs.org/Meetings/MeetingDocs/IASB/2014/May/AP10E-Conceptual%20Framework.pdf (accessed 9 July 2014), para. 28], which implies adoption of the Entity Theory. This paper explains the value judgements and arguments supporting the main equity theories and their perspectives on financial performance and financial position. It identifies Residual Equity Theory, instead of Entity Theory, as the dominant equity theory in the 2010 IASB Framework and the 2013 IASB Exposure Draft. Hence, there is a discrepancy between the perspective from which the IASB thinks financial statements should be presented and the perspective actually underlying the definition, recognition and measurement of the elements of financial statements in the IASB's Framework and Exposure Draft. Finally, this paper argues for a careful reconsideration and justification of the equity theory the IASB chooses as the basis for its Conceptual Framework

Joint stock corporation

About the book: the definitive reference source for the exploration of Japanese business and management. Reflecting the multidisciplinary nature of this field, the Encyclopedia consolidates and contextualises the leading research and knowledge about the Japanese business system and Japanese management thought and practice. It will be welcomed by scholar and student alike as an essential resource for teaching, an invaluable companion to independent study, and a solid starting point for wider exploration