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Accounting Regulation and Management Discretion in a British Building Society, Circa 1960

Author

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  • Batiz-Lazo, Bernardo
  • Billings, Mark

Abstract

This article explores the manipulation of published financial reports in order to counter the potentially unfavourable impact of newly introduced regulation. In this case the reported capital ratio of a major building society was enhanced using a sale and leaseback transaction with a related party and a change in depreciation policy, methods which reflected limited alternatives. Analysis of the case is set in the context of the mid-term performance of the building society sector and addresses the questions of whether the manipulations involved were within then-prevailing generally accepted accounting principles and why, despite disclosure in the society’s financial statements, these failed to attract public comment or concern, regulatory action or an audit qualification. In examining a major British mutual financial organisation we depart from traditional analyses of managerial discretion in accounting choices in manufacturing, mining and transport companies prior to the watershed Companies Act 1948.

Suggested Citation

  • Batiz-Lazo, Bernardo & Billings, Mark, 2009. "Accounting Regulation and Management Discretion in a British Building Society, Circa 1960," MPRA Paper 18805, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:18805
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    File URL: https://mpra.ub.uni-muenchen.de/18805/1/MPRA_paper_18805.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Accounting manipulation; Creative accounting; Sale and leaseback; Depreciation; Building societies; United Kingdom;

    JEL classification:

    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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