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Accounting for self interest in the credit crisis

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  • Roberts, John
  • Jones, Megan

Abstract

Taking as its starting point Alan Greenspan's 'shocked disbelief' in the failure of institutional self interest to prevent the credit crisis, this paper sets out to explore two related questions. How was self interest constructed in financial markets? And how might we account for its failure? Conceptually the paper draws upon Callon's (1998) analysis of 'agent-networks', the importance this gives to the agency of non-humans, and his complementary notions of 'framing'/'disentanglement' and 'overflowing' as these allow and subvert the calculation of self interest. Empirically, the paper then presents a sketch of these processes in the rise and then fall of the market for collateralised debt obligations (CDOs) that was central to the credit crisis. The final substantive section of the paper reflects on the role and 'hyperreal' interaction of accounting and models as 'mediators' in these processes.

Suggested Citation

  • Roberts, John & Jones, Megan, 2009. "Accounting for self interest in the credit crisis," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 856-867, August.
  • Handle: RePEc:eee:aosoci:v:34:y:2009:i:6-7:p:856-867
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    References listed on IDEAS

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    1. Donald MacKenzie, 2006. "An Engine, Not a Camera: How Financial Models Shape Markets," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262134608, January.
    2. Miller, Peter & O'Leary, Ted, 2007. "Mediating instruments and making markets: Capital budgeting, science and the economy," Accounting, Organizations and Society, Elsevier, vol. 32(7-8), pages 701-734.
    3. Macintosh, Norman B. & Shearer, Teri & Thornton, Daniel B. & Welker, Michael, 2000. "Accounting as simulacrum and hyperreality: perspectives on income and capital," Accounting, Organizations and Society, Elsevier, vol. 25(1), pages 13-50, January.
    4. Donald MacKenzie & Fabian Muniesa & Lucia Siu, 2007. "Introduction to Do Economists Make Markets? On the Performativity of Economics," Introductory Chapters,in: Donald MacKenzie & Fabian Muniesa & Lucia Siu (ed.), Do Economists Make Markets? On the Performativity of Economics Princeton University Press.
    5. Ingo Fender & John Kiff, 2004. "CDO rating methodology: Some thoughts on model risk and its implications," BIS Working Papers 163, Bank for International Settlements.
    6. Alan Greenspan, 2005. "Risk transfer and financial stability," Proceedings 968, Federal Reserve Bank of Chicago.
    7. Geoffrey Whittington, 2008. "Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View," Abacus, Accounting Foundation, University of Sydney, vol. 44(2), pages 139-168.
    8. Ashcraft, Adam B. & Schuermann, Til, 2008. "Understanding the Securitization of Subprime Mortgage Credit," Foundations and Trends(R) in Finance, now publishers, vol. 2(3), pages 191-309, June.
    9. Peter Miller, 1998. "The margins of accounting," European Accounting Review, Taylor & Francis Journals, vol. 7(4), pages 605-621.
    10. Souphala Chomsisengphet & Anthony Pennington-Cross, 2006. "The evolution of the subprime mortgage market," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 31-56.
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    Cited by:

    1. repec:eee:crpeac:v:25:y:2014:i:8:p:743-756 is not listed on IDEAS
    2. Barker, Richard & Schulte, Sebastian, 2017. "Representing the market perspective: Fair value measurement for non-financial assets," Accounting, Organizations and Society, Elsevier, vol. 56(C), pages 55-67.
    3. Roberts, John, 2009. "No one is perfect: The limits of transparency and an ethic for 'intelligent' accountability," Accounting, Organizations and Society, Elsevier, vol. 34(8), pages 957-970, November.
    4. Horvat Robert & Korošec Bojana, 2015. "The Role of Accounting in a Society: Only a techn(olog)ical solution for the problem of economic measurement or also a tool of social ideology?," Naše gospodarstvo/Our economy, De Gruyter Open, vol. 61(4), pages 32-40, August.
    5. O’Sullivan, Niamh & O’Dwyer, Brendan, 2015. "The structuration of issue-based fields: Social accountability, social movements and the Equator Principles issue-based field," Accounting, Organizations and Society, Elsevier, vol. 43(C), pages 33-55.
    6. Vollmer, Hendrik, 2016. "Financial numbers as signs and signals: Looking back and moving forward," economic sociology_the european electronic newsletter, Max Planck Institute for the Study of Societies, vol. 17(2), pages 32-38.
    7. repec:eee:aosoci:v:61:y:2017:i:c:p:53-67 is not listed on IDEAS
    8. repec:eee:crpeac:v:23:y:2012:i:3:p:244-257 is not listed on IDEAS
    9. Dirk J. Bezemer, 2012. "Modelos contables y comprensión de la crisis financiera," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 14(26), pages 47-76, January-J.
    10. Andrea Werner, 2014. "‘Margin Call’: Using Film to Explore Behavioural Aspects of the Financial Crisis," Journal of Business Ethics, Springer, vol. 122(4), pages 643-654, July.
    11. Jonathan Njoku, 2012. "Surveillance model of going concern in banking," African Journal of Accounting, Auditing and Finance, Inderscience Enterprises Ltd, vol. 1(1), pages 40-76.
    12. Lambert Jerman, 2015. "Les Enjeux De L'Application Des Normes Ias-Ifrs : L'Etude Des Preparateurs Des Comptes, Une Perspective De Recherche Encore Inexploree," Post-Print hal-01188736, HAL.
    13. repec:eee:crpeac:v:25:y:2014:i:1:p:17-26 is not listed on IDEAS
    14. repec:eee:aosoci:v:58:y:2017:i:c:p:32-49 is not listed on IDEAS

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