Book Reviews
2013; American Accounting Association; Volume: 88; Issue: 4 Linguagem: Inglês
10.2308/accr-10338
ISSN1558-7967
Autores Tópico(s)Public Policy and Administration Research
ResumoSebastian Botzem, the author of The Politics of Accounting Regulation: Organizing Transnational Standard Setting in Financial Reporting, is a political scientist who works on cross-border standardization and transnational governance at the Social Science Research Center in Berlin. The book is well-crafted, and gives an insight into how contemporary methods in political science have the potential to inform our understanding of standard setting.The interested reader will find it worthwhile to consult other related publications by the author, which make use of the research results reported in this book in a comparative organizational context.1 The first of these, in Critical Policy Studies (Botzem and Hofmann 2010), draws parallels between the transformation of rule-making in corporate financial reporting and in another domain which has acquired substantial rule-setting authority in the transnational sphere, that of Internet regulation. The second comparison, in Organization Studies (Botzem and Dobusch 2012), contrasts the international development of a proprietary standard by Microsoft with the formation and diffusion of transnational accounting standards by a coalition of public and private actors through the International Accounting Standards Board (IASB).Within Botzem's broader project, the IASB provides an example of how a transnational body can emerge beyond government, and how such an institution can acquire the authority to act in its own right. Indeed, through this example it can be seen how transnational rule-making not only involves profound changes in the ways the rules are set but also gives rise to a hybrid form of regulatory body that challenges the common distinction between public and private authority.In its attempt to understand the contested and political nature of accounting standard setting, this interdisciplinary book focuses on the structures and the procedures that enable transnational rule-setting. The author starts with an outline of the social theory that may explain transnational accounting standardization, noting that the shared beliefs of professions have long been able to facilitate the social closure that is important to self-regulation, but that professional bodies no longer form the main loci of expertise in accounting standard setting. This is followed by a condensed account of the IASB's emergence as the pre-eminent international accounting standard setter. Botzem claims that, in getting to this position, the IASB has out-competed a number of other endeavors to draw up international accounting rules. This is a questionable interpretation, as the two supposed competitors to the IASB (the European Community and the United Nations) have not been greatly concerned with financial reporting standards per se, but, respectively, with the harmonization of company law across the member states of the European Union and the wider accountability of multinational companies. Rather than rival initiatives, these are components of a complex nexus of overlapping demands by social actors aimed at constraining the behavior of firms.The book also attempts to set the scene by drawing links between global capitalism and the content of international accounting standards, emphasizing the capital-market orientation embodied in fair value accounting. This too is overly simplistic, in my view—we do not have to look far for a counter-example in the potential usefulness of pension accounting of employee superannuation funds.The book continues with a reconstruction of the organizational development of the IASB, arguing that, while the privately run standard setter has established the necessary procedures to consult with interested parties, it has done so without handing over too much influence. In this respect, the author claims that the IASB has subordinated democratic accountability to the effectiveness of expertise-based standardization. This is a well-worn debate among accounting researchers, practitioners, and standard setters, not only the IASB. It is particularly instructive that the revised conceptual framework issued jointly by the IASB and FASB now limits the range of addressees of general purpose financial reporting to investors, lenders and other creditors, explicitly to assist them in making decisions about providing resources to the entity. Needless to say, political scientists should be aware that various social actors have sought to foist their own public policy objectives onto the regulation of financial statements, in an attempt to extend the remit of standard setting beyond that of financial reporting. Our understanding of the IASB requires in turn a greater appreciation of international consensus over the public policy objectives financial statements.Finally, the book reports on the author's own empirical research on organizational structures and processes, by providing an analysis of the dominant individuals and the most influential organizations within the IASB's wider network.Throughout the book, the IASB is portrayed as “a successful, private, transnational, regulatory body,” whose efforts to be outside of politics are nevertheless fundamentally political in nature. While the IASB is often referred to as a “regulator” in this way (both in this book and elsewhere), the broader perspective is that law-makers, together with the financial regulators and delegated agencies that produce “soft law,” contribute jointly to the complex framework of requirements that are placed on the regulated. At the same time, the multinational operations of regulated firms readily introduce legal and regulatory extraterritorialities that muddle institutional boundaries. While Botzem grapples with some of these complexities, and introduces the reader to useful universal notions such as “boundary spanning” when generalizing the diffusion of transnational standards over different social domains, a fuller understanding of the particularities of the IASB as a regulatory body requires a more developed appreciation of the way in which the various institutions of corporate regulation interact in influencing financial reporting. For instance, not only is the black letter of corporate law transposed readily from one jurisdiction to another, so too are the formal and informal rules and processes of accounting (as they have been since the Middle Ages). The level of statist interaction, or emulation, was already high before the advent of the IASB. I suspect that cultural specificity in accounting is marginal, and that other factors, such as differences in industrial structure, may explain not only international accounting practice differentiation (Jaafar and McLeay 2007) but also the within-country alliances that influence statist regulatory differentiation.In the latter part of the book, the analysis of the Board membership is based to a great extent on the CVs of the individuals involved. In contrast, the analysis of the other IASB bodies that are investigated (the Standards Advisory Council, SAC; the International Financial Reporting Interpretations Committee, IFRIC; and the trustees) depends greatly on the assumption that each member of these bodies is a “representative” of their employer. While the modeling is detailed, it builds on shaky ground in this respect. For example, a small number of universities are listed as employing organizations (Genoa, Northwestern, São Paulo, Tama, Unitec NZ, Waseda, and Wellington). It is difficult to believe that these organizations are “represented” in any way on IASB committees, and there is no obvious reason to expect that the individuals involved necessarily act as representatives of the wider academic community. Likewise, it is not necessarily the case that an employee of the General Electric Company is a “representative” of GE, who is just as likely to have been voted in by dint of other alliances or even on the basis of individual competences. Although it may be reasonable to infer that an employee of the Korean Accounting Standards Board is a “representative” of the KASB, or even of standard setters in general, it is still plausible that individual factors are as important as institutional representation in motivating involvement with the IASB, including membership of other networks. We require a deeper understanding of these interacting alliances formed by individual members. Moreover, the analysis would benefit from including the membership of the IASB's Monitoring Board, which consists of capital market regulators.Other aspects of the analysis in this book are similarly underdeveloped. Speaking of one current Board member, who has worked in India, Europe, and the United States, it is noted that “[h]e is a member of both the Institute of Chartered Accountants of India and the American Institute of CPAs and therefore can be considered to be the ninth ‘Anglo-American' representative on the Board” (pp. 132–133). It does seem, here, as though an awkward fact is not allowed to get in the way of a good story. Unfortunately, the research places too much weight on the cliché of “Anglo-American domination.” It would be equally valid to interpret previous employment and early training with large audit firms as direct experience of international accounting, in transnational firms that command a global market in accounting and audit services. For instance, at the time of writing, just one of these firms has offices in 771 cities across 158 countries, with its employees distributed throughout Europe (34%), North America (25%), Asia (21%) and elsewhere (20%)—see PwC's Global Annual Review 2012.The author stretches the same point in other ways: “in their daily work the Board members draw on a foundation of experience rooted in an Anglo-American philosophy marked by an appreciation for private sector self-regulation and skepticism toward state intervention” (p. 133). Yet the 18 extracts from author interviews with IASB members (Tweedie is quoted nine times and Whittington four times) and others (Cairns is quoted twice, Mackintosh twice, and Mau once) provide little evidence of such attitudes, and the hypothesis therefore remains untested. Indeed, given that one of the main conclusions is that the IASB mode of expert-based self-regulation is under-representative of the users of accounting information, one might conclude that this is a very limited set of interviewees.In preparing some of the tables and figures, the author draws on the book by Camfferman and Zeff (2007), together with a wide range of IASB documents. Yet Botzem's book repeats an earlier accusation of an Anglo-American bias in Camfferman and Zeff's analysis of the evolution of the IASC, following on from a critique by Botzem and Quack (2009). I am not convinced that this is a valid construct—it is something of a straw man, and is anyway prior to the emergence of the IASB. Elsewhere, Zeff (2011) has documented the evolution of the IASC into the IASB, showing how companies and governments have become proactive players.Alongside other ongoing work, including some that attempts to gauge the impact of the IASB (see Pope and McLeay 2011), this book on organizing transnational standard setting in financial reporting provides some useful insights. It is interesting that, at the time of writing this review, the SEC has charged the affiliates of five of the world's largest auditing firms with violation of U.S. securities law, a charge which centers on the refusal to hand over the paperwork from audits of the financial statements of U.S.-listed Chinese companies on the grounds that state secrecy laws in China prevent the release of audit papers to U.S. regulators (International Herald Tribune 2012). To better understand the international politics of accounting regulation, we need to consider these conflicts and alliances between governments (and their regulatory bodies) and how they may condition the networking of the individuals involved with delegated standard setters such as the IASB.The Verband der Hochschullehrer für Betriebswirtschaft (VHB) “is the German Academic Association for Business Research and pursues the development of business administration as an academic discipline at universities” (VHB, English language website). This book provides an overview of the history of the VHB from its foundation in 1921 until the end of the 20th century. It also provides a history of the discipline which the association represents.This book is written in German and, it seems, for an audience primarily comprising VHB members, or at least those familiar with the discipline of Betriebswirtschaft (BWL) and with the organization of German academe. Therefore, an explicit account of what distinguishes BWL from related disciplines in other cultures may not have been felt necessary. However, one of the difficulties in reviewing this book for an English-speaking readership is the need to translate German concepts for which there are no English language equivalents. The very terms Betriebswirtschaft and Betriebswirtschaftslehre (the science of Betriebswirtschaft) can be translated as, inter alia, business administration, business management, business economics, or business studies.The lack of an equivalent translation is an indication of the different histories of related disciplines in different academic and business traditions. The different possible translations are also a clue to the breadth of the subject matter and to difficulties in its demarcation from related disciplines during its history. This relationship with other disciplines is explored throughout this book.In essence, the VHB represents interests considerably wider than accounting and finance, and many of the famous names (Schmalenbach, Schmidt, Mahlberg, etc.) associated with the history of BWL were not, or not only, professors of accounting in a narrow sense. The VHB's membership represents 16 subject areas or sub-disciplines: banking and finance; business taxation; academic management; international management; logistics; marketing; sustainability management; public business administration; operations research; organization; human resources management; production management; accounting; technology, innovation and entrepreneurship; business information systems; and economic science (VHB website; see also Chapter 1). The subject group for accounting was formally constituted in 1977 and includes financial reporting, managerial accounting, controlling, and auditing (VHB website).One development that makes translation easier is that German academe embraces the English language. Many university departments within BWL and the even wider Wirtschaftswissenschaften (approximately: the business and economic sciences) use English language designations, and some of BWL's younger sub-disciplines and areas of specialization have English titles, or Germanified English titles, such as Marketing, Technologie-und Innovationsmanagement, and Controlling. A warning, though, for the unwary: these designations do not necessarily represent institutions or disciplines equivalent to those in U.S. or U.K. academe. In spite of increasing internationalization, in many cases what they denote is either distinctly German, or sufficiently suffused in German traditions to constitute unique hybrids.As explained in Chapter 1, membership of the VHB is now open to anybody holding a chair in BWL at a university with the right to award doctorates (i.e., not a university of applied sciences, which does not have this right). It is also open to honorary professors and those working in academe and in the process of qualifying toward a professorship. The association also has honorary members, and since the 1990s it could co-opt members from practice who contribute to teaching and research. Wolfgang Burr and Alfred Wagenhofer, the coordinating editors, point out that, since the association's formation, virtually all (initially German, later also Austrian and German-speaking Swiss) professors of BWL have been members. Membership has grown dramatically in recent decades: in 1914, there were 23 professors of BWL in the German language arena. By 1955 there were 67. Present-day membership amounts to nearly 2,000.The book consists of three main parts. Two introductions present different perspectives. The first is by Caren Sureth, VHB president (2011–2012), and notably the only female voice. The second is by Burr and Wagenhofer. Appendices include the original and the present articles of association as well as lists of the VHB's sub-discipline groups, of annual congresses, presidents, and vice-presidents, and honorary members, and membership statistics (from 1948). A small number of photographs feature in selected chapters.As noted by Burr and Wagenhofer, the book's title reflects its dual nature: on the one hand a systematic documentation of the history of the association, and on the other hand “snapshots” attempting to capture specific periods or episodes, personal histories or experiences, or the development of sub-disciplines.This dual nature is reflected in the structure of the book's three parts. Fourteen main chapters consist each of longer systematic overviews relating to particular themes, supplemented by a total of 28 Kurzgeschichten (“short stories”) made up of personal recollections or short explorations of specific topics or events. Excluding the prefaces, there are 42 contributions by 31 authors. All of the authors are eminent professors, including emeriti, of BWL. A considerable number represent former high-ranking members, including former presidents and vice presidents.Part I is dedicated to the history of the association itself. Its chapters, including the short stories, provide first an overview of this history and structure (Chapter 1, see below), and then explore specific time periods and the influence of prominent individuals in more depth: 1921–1933 (Chapter 2), 1934–1947 (Chapter 3), 1948–1970 (Chapter 4), and 1970–2000 (Chapter 5). Kurzgeschichten supplementing these main contributions reflect inter alia on memorable congresses, membership applications thwarted by red tape, and biographies of, or reflections on, the influence of specific members, including Erich Gutenberg and his contribution to methods and theory, and the academically pioneering, but ideologically controversial, Heinrich Nicklisch.Part II explores the history of the discipline itself: Chapter 6 provides an overview of the history of BWL in the German language area (see below), and Chapter 7 examines in more depth its fundamental orientations (with regard to methods, theories, and contents). Kurzgeschichten here deal with the influence of prominent individuals (such as Schmalenbach and Schumpeter), the Methodenstreit (dispute over methods, see below), and specific sub-disciplines: operations research, logistics, and controlling.Part III, the longest part, is titled “Recurring Themes.” Chapter 8 examines the discipline's relationship to neighboring disciplines, especially Volkswirtschaftslehre (economics), and Chapter 9 explores specialization and differentiation within the wider BWL. Chapter 10 investigates the history of the interdependence of enterprises and the state, and Chapter 11 the increasing internationalization of German BWL. Chapter 12 reflects on initiatives to support young academics, and Chapter 13 reviews the history of BWL education and educational innovation throughout the 20th century. Chapter 14, finally, examines political and policy of science initiatives since 1950. Kurzgeschichten in this part deal, inter alia, with the influence of the behavioral sciences on the management sciences, the history of selected sub-disciplines (marketing, organization [science], and technology- and innovations-management), and the historical relations with Japan, as well as reflections by a Japanese and a Spanish member.Because they provide clear overviews of the histories of the association and of the discipline, respectively, and create a foundation for the more specific content of the other contributions, Chapters 1 and 6 are examined in more detail below.Chapter 1, by Arnold Picot, provides an overview of the history of the association. The original objectives are included to promote BWL in research and teaching, to strive toward appropriate representation of BWL at suitable universities, and to represent members' professional interests. An annual congress was initiated, and the papers presented were published in academic journals established by the VHB's founding members. National Socialism and the Second World War interrupted the association's activities. Whether, and to what extent, it was active, remains unclear because of a lack of surviving sources. The first post-war meeting took place in October 1948, within the ruins of the University of Frankfurt, with 35 delegates. The association was formally reconstituted in 1950.From 1952 onward, international contacts were increasingly established, and the congresses in 1954 and 1957 took place, respectively, in Innsbruck and in Vienna. Membership was opened to international members who were, initially, mostly Austrian and German-speaking Swiss. In general, international outreach increased in the 1960s and 1970s, first in research, then in teaching. In addition, 1991 saw the integration of members from the former German Democratic Republic. Interestingly, links with Japan had existed throughout the association's history, and the association is credited with influencing the creation of a Japanese society for BWL in 1926.From the 1970s onward, sub-discipline committees were created. This development was linked to greater diversification and specialization. BWL's increasing academic significance was also associated with the growth of the VHB's membership and rising student numbers. Based on the latter, it is now the largest discipline at German universities.Chapter 6, by Burr, provides a general overview of the history of the discipline. It takes its structure from an exploration of six development trends. Its first section discusses the subject's institutionalization and early endeavors to gain academic legitimacy. This required a balance to be found between the demands of practice versus those of theory and academe, as well as demarcation from other academic fields, including macro-economics. The creation of the first business schools and university faculties for BWL (Leipzig, Vienna, and Aachen in 1898) and of academic journals contributed to the legitimation of the discipline. Its present-day significance is reflected in student numbers, the number of university chairs in BWL (1,150 in 2008), the significant grant-funding available for research projects, and international recognition.The second section explores changing trends in epistemology and research objectives. By contrast with early years, the focus in recent decades has broadened to include a greater interest in the external environment of business, the market, and the state, in networks and cooperation between enterprises. This is reflected in an interest in market-oriented management, logistics, marketing, and, most recently, corporate social responsibility.Section three discusses changing priorities. Early core interests were gradually expanded. Core subject areas still include financial reporting and managerial accounting, investment and finance, marketing, and organization, but have been supplemented by other sub-disciplines, including innovation management, environmental management, business ethics, and corporate social responsibility. German contributions to theory have been complemented since the 1980s with trends from the U.S., including the new institutional economics, the “resource-based view of the firm,” and new institutional theory. Emphasis has also been increasingly on empirical research and on a measurable assessment of economic reality. A further core activity has been the development of methods to solve real-world problems in enterprises, for example, valuation and measurement methods, financial instruments, market research, and strategic instruments, such as balanced scorecards, system dynamics, and operations research.The fourth section further explores changing trends and controversies relating to methodology. Fundamental questions were already debated during the early days of the discipline. Normative research competed with empirical realism. The first of these Methodenstreite referred to the value judgment dispute in economics. While some argued that BWL should be value-neutral and refrain from making policy recommendations, others emphasized its character as an applied science, which should also be concerned with the solving of practical problems. Burr suggests that, at present, BWL benefits from pluralism in theories and methods, and that variety is accepted.Burr's fifth theme relates to interdisciplinary developments. In particular the relationship to economics is explored. Burr observes a recent increasing rapprochement between the disciplines in terms of subject matter and methods. He acknowledges that developments in economics have often preceded similar ones in BWL, in terms of, for example, the globalization of research and publications, the increasing importance of international, ranked journals, and consultancy work. However, a stronger emphasis on economics is feared by some to result in reduced practical relevance, in favor of excessive focus on methods. The relationship of BWL to disciplines other than economics is only briefly considered. Burr believes that closer links with, inter alia, engineering, social sciences, law, or psychology are conceivable.Finally, Burr briefly considers the internationalization of the discipline. (This is explored in detail by Klaus Macharzina, in Chapter 11.) While before WWII, German BWL was internationally recognized and influential, after the war it remained confined to the German language area. Internationalization of enterprises was not a research priority before the 1980s. Meanwhile, Anglo-American management science began to dominate. According to Burr, the question now remains whether BWL will, in the longer term, be absorbed in international management research, and to what extent it will adopt publication standards, research methods, and theories from management science.A number of themes recur throughout the book, and are explored in separate contributions in greater depth. For example (as noted also by Sureth) the scientific or academic direction of the discipline was a question that occupied the VHB throughout, as were the value judgment disputes, the Methodenstreit, and the question of the relationship to other disciplines, in particular to economics. Prominent individuals (for example Schmalenbach, Schneider, Nicklisch, and Gutenberg) feature repeatedly, and so do the themes of internationalization and diversification. Some chapters or Kurzgeschichten tackle controversial themes, and hint at power struggles, competition, and politics within the association and the discipline.The book's structure, comprising main contributions and shorter, personal vignettes, is original and engaging. It presents a variety of perspectives which, in most cases, enrich and complement each other. This makes, mostly, for entertaining reading, and provides an opportunity to provide different perspectives. However, a disadvantage of this structure is that it is difficult to gain an overview of a specific topic, information about which is scattered throughout several chapters. A directory of names is available, and it is useful to trace contributions about specific individuals, but there is no other (topic) index. Also, in a few cases the choice of the Kurzgeschichten allocated to the main chapters seems not entirely clear, and to an outsider, not all of the Kurzgeschichten appear entirely relevant.Also, a surprising omission is contributions by female authors. This may be a reflection of the small proportion of female VHB members (14 percent, according to Picot in Chapter 1). However, the recollection of one of the first female members in such a male-dominated association and discipline would have been interesting.The style of the contributions varies considerably. Almost all chapters are informative, but while some are entertaining and absorbing, some are overly detailed, descriptive, and somewhat labored, and could have been enlivened by a more explicitly critical or engaging approach. Some contributions appear to lose their way by presenting long lists of facts or of individuals—the latter, in particular, may not be meaningful to all readers, although it is perhaps assumed that these names are sufficiently eminent to be recognized. Such contributions appear to be targeted at a limited, insider-readership. On the other hand, especially among the Kurzgeschichten, styles vary greatly, and some voices are refreshingly funny, provocative, and sometimes slightly subversive, or, as noted by Sureth, ironic but thought-provoking. Perhaps some of the most interesting personal memories are not included, because, as Burr and Wagenhofer report, one potential author turned down the invitation to share his or her recollections, because not all of those who would have featured in these might have appreciated the humor.In a sense, the book addresses a serious gap in the credentials of an eminent professional association—a consciousness of pride in, and engagement with, its own history. Unfortunately, as noted by Burr in Chapter 6 and by Burr and Wagenhofer, there is only relatively limited commitment to research into the history of the discipline, a history which is closely linked to economic and social developments and thus has evolved through periods of economic growth, crises, wars, inflation, reunification, technical developments, and changes in the global economy and political systems. However, in spite of some current VHB initiatives, this history is still under-researched.Burr offers t
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