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Accounting and the Truth of Earnings Reports: Philosophical Considerations

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  • Norman Macintosh

Abstract

This paper investigates the philosophical nature of accounting reports of earnings. Standard setters' authoritative pronouncements (conceptual frameworks, GAAP, EITFs, etc.) hold to the realist philosophical view that true earnings reports are ex post representations of some ex ante out-there, preexisting, extra-linguistic real economic increase in the enterprise's wealth. Contra this view, in practice financial accounting executives, in league with investment analysts, routinely engage in earnings management and manipulation in order to satisfy the capital market's insatiable demands for earnings levels which will support and enhance the enterprise's stock market price. The paper considers this state of affairs from Harold Frankfurt's truth, lies and 'bullshit' treatise (2005, 2006). It sees earnings reports as 'short of lies', and so the accountants can only be faulted for their indifference to the truth and for giving the impression that they are trying to present the truth. A poststructuralist philosophical perspective, however, problematizes this conclusion on the basis that accounting language is not a transparent medium but rather is the material used to manufacture accounting 'truths'. It sees accounting 'truths' as contingent upon linguistic doctrinal accounting discourses currently ceded place of privilege by standard setters and upon the subjective considerations of accountants when they produce reports of earnings. The paper concludes that both Frankfurt's perspective and that of poststructuralist philosophers can provide valuable insights into this ironic state of affairs.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal European Accounting Review.

Volume (Year): 18 (2009)
Issue (Month): 1 ()
Pages: 141-175

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Handle: RePEc:taf:euract:v:18:y:2009:i:1:p:141-175

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Cited by:
  1. Solomon, Jill F. & Solomon, Aris & Joseph, Nathan L. & Norton, Simon D., 2013. "Impression management, myth creation and fabrication in private social and environmental reporting: Insights from Erving Goffman," Accounting, Organizations and Society, Elsevier, vol. 38(3), pages 195-213.
  2. Bertrand Malsch & Yves Gendron & Frédérique Grazzini, 2011. "Investigating interdisciplinary translations: The influence of Pierre Bourdieu on accounting literature," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 24(2), pages 194-228, February.
  3. Morales, Jérémy & Lambert, Caroline, 2013. "Dirty work and the construction of identity. An ethnographic study of management accounting practices," Accounting, Organizations and Society, Elsevier, vol. 38(3), pages 228-244.

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