Window-dressing in German inter-war balance sheets
German accounting rules value assets and liabilities asymmetrically and thus lead to grossly distorted balance sheets. In the inter-war debate on a reform of disclosure regulation, financial experts considered the (undisclosed) tax balance sheet, which had to be drawn up separately for the corporate tax assessment, as a paradigm for adequate financial disclosure. However, due to tax secrecy they were barred from analysing tax documents. Using archival evidence, we analyse tax balance sheets as a means of assessing the reliability of disclosed balance sheets of the inter-war period. It emerges that companies overstated their profits in the mid- and late-1920s, but grossly understated them in the Nazi economy.
Volume (Year): 8 (1998)
Issue (Month): 3 ()
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- Edwards, Jeremy & Ogilvie, Sheilagh C., 1995.
"Universal Banks and German Industrialization: A Reappraisal,"
CEPR Discussion Papers
1171, C.E.P.R. Discussion Papers.
- Jeremy Edwards & Sheilagh Ogilvie, 1996. "Universal banks and German industrialization: a reappraisal," Economic History Review, Economic History Society, vol. 49(3), pages 427-446, 08.
- George J. Benston, 1994. "Universal Banking," Journal of Economic Perspectives, American Economic Association, vol. 8(3), pages 121-143, Summer.
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