Reviewed by
J. Edward Ketz
University of Connecticut
This publication contains the proceedings of a conference on ac-counting research held at the University of Illinois at Urbana-Cham-paign on April 5 and 6, 1971. The purpose of the conference was to provide a forum for a critical discussion of developments in accounting theory up to 1970. The conference had four sessions in which each session had a paper, two critiques of the paper, and short discussions. The sessions were: a priori research in financial accounting; a priori research in management accounting; behavioral research in accounting; and empirical research in accounting.
Carl Nelson’s “A Priori Research in Accounting” is restricted to an evaluation of theories on income determination and asset valua-tion. By examining the works of Canning, Paton and Littleton, Mac-Neal, Alexander, Sprouse and Moonitz, Edwards and Bell, Chambers, and Sterling, Nelson censures most of the work in current value accounting. His criticism is based on their ignoring the valuation of intangible assets, the difficulty of implementing the proposals, the belief that replacement cost is not value, and the inconsistent treatment of liabilities. ljiri essentially agrees with him and calls for more work in measurement theory and in studying the contents of financial reports. In his commentary, Larson chastises Nelson for ignoring linkages with other aspects of accounting. While Nelson’s paper is an interesting evaluation of current value accounting, I felt that it would have been more promising, given the objectives of the conference, if he had explored the reasons why “we are not significantly advanced from where we were in 1960” (p. 15) and if he had indicated what accounting researchers should have been doing in the 1960’s.
In “Some Fruitful Directions for Research in Management Accounting,” Robert Anthony attempts to identify research topics in management accounting that have a good chance of eventual practical use. Accordingly, he concludes that there is great disparity between the topics on which researchers concentrate and the topics he feels likely to be most fruitful, and that economic models have rendered a disservice to management accounting because they focus attention on the wrong things. Demski replies that information economics, which was not critiqued by Anthony, is a potent body of knowledge which will provide many insights to accounting. Dyck-man’s comments are that a greater discussion of behavioral research should have been made and that model-building is an important aspect of accounting theory. Anthony’s discussion that accounting research needs to be pragmatic seems appropriate as long as we do not reject a long-term outlook. Let us not forget that Einstein’s theory preceded practical payoffs from the theory by decades.
David Green paints a pessimistic view in “Behavioral Science and Accounting Research.” He enumerates many weaknesses in behavioral accounting research and tentatively concludes that it might be better to research other topics. Bruns and Birnberg counter that the area is a relatively new one and that unrealistic expectations should not be demanded. I agree with Bruns and Birnberg. While many weaknesses exist in the behavioral accounting literature, at least the researchers in the 1960’s were asking very important questions.
The best paper in the collection is “Empirical Research in Ac-counting, 1960-70: An Appraisal,” by Nils Hakansson. He collates and reviews the major articles and critiques them in a general fashion. He feels that the problems examined in the 1960’s were relevant but that the attention of researchers should be expanded to other areas. Hakansson enumerates a number of research topics that are still fruitful areas for analysis. He also points out that model-building needs to be improved if empirical researchers are to study appropriate hypotheses. Benston and Gonedes point out further criticism of specific papers in empirical accounting research and they emphasize the role of predictions as opposed to realistic assumptions for model testing. The exchanges in these three papers provide an excellent analysis of empirical research in the 1960’s.
The conference format for this topic had a few advantages but many disadvantages (see also Gerboth’s review in The Accounting Review, October 1974, pp. 882-884). The basic advantage is that a number of leading scholars can debate the variety of issues involved so that a more balanced picture emerges. On the negative side, however, the conference format presented several problems. First, there is a lack of unity among the papers. Too many times the authors wrote as if the topics were mutually exclusive. It would have been more promising if a greater integration of the research aspects had been made. Second, the document lacks cohesion. Too many topics fell between the cracks and were not discussed; e.g., a deductive approach to accounting such as Mattesich’s Accounting and Analytical Methods, Measurement and Projection of Income and Wealth on the Micro—and Macro—Economy (1964); an inductive approach to accounting such as Schrader’s “An Inductive Approach to Accounting Theory,” The Accounting Review (October, 1962); an ethical approach to accounting such as Arnett’s “The Concept of Fairness,” The Accounting Review (April, 1967); and a macroeconomic approach to accounting such as Mueller’s “Accounting Within a Macroeconomic Framework” in his International Accounting (1967). Finally, none of the papers provide any clues as to why research in accounting accelerated in the 1960’s, what differentiated the 1960’s from other periods of time, and why it took the forms it did.
Overall, the book is a good place to begin to obtain a historical perspective of accounting in the U.S. in the 1960’s. The lack of in-tegration and the lack of cohesion, however, limit it to only a beginning.
