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What Do Shareholders Do? Accounting, Ownership and the Theory of the Firm: Implications for Corporate Governance and Reporting

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  • Biondi Yuri

    (CNRS, France)

Abstract

In the last three decades, corporate governance and reporting have been confronted to a drift toward shareholders’ primacy and value, and the revival of old-fashioned proprietary views against entity views on the business firm. This paper develops an accounting perspective of the relationship between shareholding and the inner congeries of the enterprise entity. These congeries require an accounting system, instead of a market price system, to deal with. Theoretical insights and improved accounting reporting methods are then presented to better represent and control the relationship between shareholding and the business firm, based upon the distinction between shareholders’ income and equity from income and equity to the enterprise entity. This distinction is especially important in case of goodwill, asset revaluations and share buybacks, as well as share issuance (use) for employee benefits and business combination considerations. Absent this distinction, accounting systems might enable corporate Ponzi schemes (through the corporate shield) by insiders (either executive management or controlling blockholders) to the detriment of other stakeholders, including outsider shareholders, and the continuity of the business enterprise over time.

Suggested Citation

  • Biondi Yuri, 2012. "What Do Shareholders Do? Accounting, Ownership and the Theory of the Firm: Implications for Corporate Governance and Reporting," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 2(2), pages 1-29, June.
    • Handle: RePEc:bpj:aelcon:v:2:y:2012:i:2:n:5
    DOI: 10.1515/2152-2820.1068
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    Cited by:

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    2. Colin Haslam & Nick Tsitsianis, 2015. "Financialized Accounting: Capitalization and leveraging the intangible," Working Papers 58, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    3. Biondi Yuri, 2017. "Accounting for Europe’s Economy and Society: Considerations for Financial Stability, Economic Development and the Public Good," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 7(2), pages 65-77, July.
    4. Tiago Cardao-Pito, 2021. "An embezzler test for norms, standards and regulations," Journal of Financial Crime, Emerald Group Publishing Limited, vol. 29(3), pages 878-889, August.
    5. Fantacci Luca, 2013. "Why Banks Do What They Do. How the Monetary System Affects Banking Activity," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(3), pages 333-356, November.
    6. Weinstein Olivier, 2013. "The Shareholder Model of the Corporation, Between Mythology and Reality," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(1), pages 43-60, January.
    7. Butzbach Olivier & Rotondo Gennaro & Desiato Talita, 2020. "Can banks be owned?," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 10(1), pages 1-21, March.
    8. Clarke Thomas, 2013. "Deconstructing the Mythology of Shareholder Value: A Comment on Lynn Stout’s “The Shareholder Value Myth”," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(1), pages 15-42, January.

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