Reviewed by Anne Fortin University of Quebec at Montreal
This book constitutes an anthology of research in accounting in the 1980s. It includes six reprinted articles together with a comprehensive Commentary by the editor on research in the 1980s and an Index of names.
The Commentary is well written and represents a very valuable overview of the areas of research in accounting. Mattessich divides his Commentary into eleven sections complemented by an extensive Bibliography. Generally, in these sections, he adequately presents the main issues related to a particular research theme, indicating authors that made important contributions to the area during the decade. In each appropriate section, Mattessich also describes the general content of the paper(s) chosen for reprint, and the main arguments of the author(s).
In the Commentary’s first section, Mattessich highlights financial, economic and social problems of the 1980s in the United States and Canada, together with the shortcomings of accounting in helping to prevent or solve these problems.
In the second section, Mattessich stresses the need for having an historical perspective on accounting to have some knowledge of the history of ideas. He mentions a number of books, monographs and articles that have such a perspective, including publication and citation analysis. He emphasizes the research of Denise SchmandtBesserat which offers evidence that “it was accounting which gave rise to writing as well as abstract counting, and not the other way around” [p. 4].
In section three, Mattessich comments on the controversy between basic analytical research in managerial accounting and the practice oriented approach with its case methodology, field studies and field experiments. An article by Kaplan, published in Accounting, Organizations and Society in 1986, “The Role for Empirical Research in Management Accounting”, was chosen to support this area of research.
In section four, Mattessich deals with organizational and behavioral accounting which he divides in three areas supported by tables presenting dominant assumptions (reprinted from Chua [1986]), The Accounting Review). The first area, behavioral accounting, is complemented by a review article, “Behavioral Research on the Production and Use of Financial Information”, from Richardson and Gibbins, published in Ferris, ed., Accounting Research: A Critical Analysis in 1988. The other two areas discussed by Mattessich are the Interpretative perspective and the CriticalRadical perspective in organizational accounting.
The area of positive theory and financial accounting is dealt with in the fifth section. Mattessich refers to Watts and Zimmerman’s book Positive Accounting Theory and to numerous authors who have criticized that approach. He then contrasts the two perspectives in research related to security prices: the older standard returns model and the newer crosssectional valuation perspective. A table of “Sample Research [19801988] on the Relationship Between Earnings and Stock Returns” from Lev’s [Journal of Accounting Research, 1990] paper “On the Usefulness of Earnings and Earnings Research: Lessons and Directions from Two Decades of Empirical Research” is included in this section. The new perspective is surveyed in the reprinted article of Atiase and Tse, “Stock Valuation Models and Accounting Information: A Review and Synthesis” [Journal of Accounting Literature, 1986]. Mattessich concludes this section by commenting on Ohlson’s reprintpaper “A Synthesis of Security Valuation Theory and the Role of Dividends, Cash Flows, and Earnings” [Contemporary Accounting Research, 1990].
In section six, Mattessich puts in evidence the importance of inflation accounting in the academic community by listing a number of the many books that were written on current value accounting. He also gives potential reasons for the failure of the implementation of accounting for changing prices and comments on the results obtained by some researchers which seem to indicate that no inflation accounting model supplies information superior to the historical cost model. The reprintarticle, selected for its excellence, is Thornton’s “Current Cost Disclosers and Nondisclosers: Theory and Canadian Evidence” [Contemporary Accounting Research, 1986].
AgencyContract theory is dealt with in the seventh section. Mattessich cites numerous authors of surveys of agency theory and details the content of the article by Baiman chosen for reprint: “Agency Research in Managerial Accounting: A Second Look” [Accounting, Organizations and Society, 1990]. Mattessich discusses the paper by Morris [Accounting and Business Research, 1987], “Signalling, Agency Theory and Accounting Policy Choice”, which compares the axiomatic basis of signalling theory and agency theory. A table from Eisenhardt’s article “Agency Theory: An Assessment and Review” [The Academy of Management Review, 1989] summarizes empirical agencycontract studies. Finally, Mattessich concludes this part with a discussion of an article by Noreen, “The Economics of Ethics” [Accounting, Organizations and Society, 1988].
In the eighth section of the Commentary, Mattessich reviews the different areas in the field of auditing research based on a paper written by Scott, “The State of the Art of Academic Research in Auditing” [Journal of Accounting Literature, 1984] and some recent publications. Citing a number of authors, he discusses topics such as statistical sampling theory, decision theory, auditor independence, the conflict arising from management advisory services, application of agency theory to auditing.
The ninth section is devoted to international accounting research. Although no reprintpaper from this area appears in the anthology, Mattessich refers to a review article by Bindon and Gernon, “International Accounting Research” that was published in Advances in Accounting in 1987. Further, a number of noteworthy books are signaled.
In section ten, other areas of research in accounting which deal with the reality behind accounting variables, axiomatic foundations or models, analytical framework for accounting theory, matrix accounting and its relationship to expert systems in accountancy are discussed. The contribution of Ijiri’s work on tripleentry bookkeeping is also commented upon.
In the epilogue, Mattessich says that the course of accounting research during the 1980s was “predominantly consolidating and puzzlesolving” [p. 36]. He criticizes the neglect of foundational and normative issues in the decade for the emergence of fads, and finds the research too fragmented and lacking a holistic approach.
Overall, for a reader interested in knowing what was written in the various areas of accounting research in the 1980s and by whom, this book is an invaluable reference. It constitutes a good organizer of the accounting literature. An impressive number of papers and books are mentioned and put in a well developed perspective. The review articles chosen for reprint are appropriate. However, two articles were selected in financial accounting while none represented areas such as auditing or international accounting. Ohlson’s reprintpaper was probably chosen for its relevance to the future in that it provides a synthesis of the theory of security valuation for multipledate settings with uncertainty and offers interesting results following the development of an appropriate model framework.
For the interested reader, a few noteworthy articles were not mentioned: in the financial area, two papers by Ou and Penman [1989] deal with accounting measurements and their ability to predict future earnings and stock returns; in the auditing area, an article by Bédard [1989] provides a critical review of the research related to expertise in auditing. Finally, since research in accounting education is only briefly mentioned in the preface to the volume, a reader interested in this developing area of research could refer to the extensive reviews by Rebele and Tiller [1986] and by Rebele, Stout and Hassell [1991], the latter having been published after Mattessich’s book.
REFERENCES
Bédard, J. , “Expertise in Auditing: Myth or Reality?”, Accounting, Organizations and Society (1989, No. 1/2): 113131.
Ou, J. A. and S. H. Penman, “Accounting Measurement, PriceEarnings Ratio, and the Information Content of Security Prices”, Journal of Accounting Research (Supplement 1989): 111144.
Ou, J. A. and S. H. Penman, “Financial Statement Analysis and the Prediction of Stock Returns”, Journal of Accounting and Economics (1989): 295329.
Rebele, J. E. and M. G. Tiller, “Empirical Research in Accounting Education: A Review and Evaluation”, in A. C. Bishop, E. K. St. Pierre and R. L. Benke (Eds.), Research in Accounting Education, pp. 154, Harrisonburg, VA: Center for Research in Accounting Education, James Madison University, 1986.
Kebele, J. E., D. E. Stout and J. M. Hassell, “A Review of Empirical Research in Accounting Education: 19851991”, Journal of Accounting Education, (Fall 1991): 167231.
