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Beginnings of financial reporting and premises of consolidation of accounts in French aluminium industry,1921-1939

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  • Didier Bensadon

    ()
    (DRM - Dauphine Recherches en Management - CNRS : UMR7088 - Université Paris Dauphine - Paris IX)

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    Abstract

    The expansion of groups of companies during the inter-war years is one of the most profound transformations in the structure of French capitalism. Studies in economic history have shown the importance of the subsidiary creation phenomenon in relation to Compagnie Générale d'Electricité, Energie industrielle or Schneider . By contrast, these studies are less interested in the specific arrangements for auditing subsidiaries and managing Company Groups. This article seeks to show how and why the directors of Alais, Froges et Camargue - The largest French company in the aluminum sector- established specific audit measures from the 1920s onwards. This research is essentially based on the company's archives (annual reports, general organisation chart and memoranda from the general secretariat). Even if the results published in the annual reports should be treated with the utmost caution, in particular owing to the absence of accounting regulation in France in the inter-war years, they remain essential for assessing the important position of subsidiaries and main shareholdings in assets. The scope of the subsidiary creation phenomenon, which is behind the establishment of specific controls, is highlighted. This trend, far from being linear, is strongly influenced by the economic and political situation. The size of the Group's growth gave rise to two types of requirements for the directors of Alais, Froges et Camargue, namely to audit the subsidiaries and to measure the group's net cash flow. The response to the need for auditing the subsidiaries was provided by the introduction of financial reporting from 1921. Faced with the increasing number of subsidiaries and main shareholdings held by Alais, Froges et Camargue, this control mechanism was to be strengthened in 1931. Furthermore, the necessity of measuring the Group's net cash flow led the directors in 1927 to draw up a financial statement whose conceptual foundations were based on those of the consolidation of accounts

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    Paper provided by HAL in its series Post-Print with number halshs-00640503.

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    Date of creation: 03 Nov 2011
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    Publication status: Published - Presented, IAAER - ACCOUNTING RENAISSANCE Lessons from the Crisis and Looking into the Future. Learning from Histories and Institutions, 2011, Venise, Italy
    Handle: RePEc:hal:journl:halshs-00640503

    Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00640503/en/
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    Keywords: financial reporting; accounting history; group accounts; French aluminium industry; shareholdings.;

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    1. Ludovic Cailluet, 1997. "Accounting and accountants as essential elements in the development of central administration during the inter-war period: management ideology and technology at Alais, Froges et Camargue (AFC-Pechiney," Accounting History Review, Taylor & Francis Journals, vol. 7(3), pages 295-314.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Financial Reporting and Consolidation in the French Interwar Aluminium Industry
      by bbatiz in NEP-HIS blog on 2012-03-04 16:07:42
    2. Financial Reporting and Consolidation in the French Interwar Aluminium Industry
      by bbatiz in NEP-HIS blog on 2012-03-04 16:07:42

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