Reviewed by Earl K. Littrell Willamette University
This volume describes and analyzes the financial reporting prac¬tices of 20 industrial companies from 1969 back as far as 109 years to 1861. (The book’s title is a bit overstated since the median com¬pany first reported in 1902, for 68 years of coverage.) The format consists of text, annual report excerpts, and tables, with 7 general topic areas broken into 63 specific financial reporting practices. Cover-to-cover, it makes dry reading, although the resulting material is nonetheless of much potential use.
Although it is a strong tradition in scholarly articles in other disci-plines, historical references are not the rule in accounting articles. Probably the main use for this material is to provide such historical reference material for accounting writers. After all, tracing the his¬tory of an issue is symbolic of having made at least some literature search, and in the future one would hope to find such references in accounting as automatically as one finds the Augustinian Mendel in the genetics literature.
Two examples illustrate this point. LIFO is commonly treated as born and reared in the 1960’s and ’70’s. 10 of Vangermeersch’s 20 companies use LIFO as of 1969, and they all made the LIFO adop¬tion in the 1941-55 period (Table 15, pp. 84-5). Similarly, the long history of the funds statement is frequently ignored. One of Vanger¬meersch’s companies has issued a “formal” funds statement since 1902, and by the 1940’s 9 of the companies were providing at least “informal” funds statements (Table 27, p. 99).
However, the sample of companies is not nearly strong enough to extend “LIFO as a post-WWII issue” and “funds statement as a pre-1950 issue” to general rule status. Instead, the sample is a con-venience sample, albeit attractive. The companies were selected “. . . because of the length of time they had been reporting, the completeness of their report files at (Harvard’s) Baker Library, and the goal of covering companies in as many different industries as possible (p. ix).” Of course, the author is aware of the limitations inherent in his selection procedures, and in closing he proposes ex-panding the study to as many as 50 companies. Still, 50 does not approach the claim to “representativeness” that Accounting Trends and Techniques can make with some 600 companies.
Along the way, some attention is devoted to 1920’s-style asset write-ups, direct entries to retained earnings, debit bias in extra¬ordinary classifications, and other issues. Given the data limitations, the results are more intriguing than convincing.
Nonetheless, having this volume at hand could lead to significant improvement in the quality of much of the accounting literature. This prospect can be held out for few other accounting works of 100 pages or less.
