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Changes In The Depreciation Of Buildings In An English Building Society, Circa 1959: Financial And Governance Implications


  • Batiz-Lazo, Bernardo


This article explores the manipulation of published financial reports in order to counter perceived unfavourable impact, on an entity, of newly introduced regulations. The article departs from the traditional analysis of asset depreciation in manufacturing or mining and the link between market efficiency and stock market performance. This by looking at the depreciation of fixed assets in a mutual financial organisation. The change in the depreciation of free-hold buildings was a reaction to limited possibilities for asset management, was taken in the context of substantial growth in mortgage assets and was not followed by any notification in the financial statements. Issues in favour and against qualifying are then analysed in the context of the mid-term performance of the building society as well as the performance of net reserve ratios at other major building societies. CHANGEMENT DE LA METHODE D'AMORTISSEMENT DES BÂTIMENTS : LE CAS DE LA SOCIÉTÉ DE CONSTRUCTION ANGLAISE CIRCA (1959) AVEC SES INCIDENCES EN TERMES FINANCIERS ET EN MATIERE DE GOUVERNANCE Résumé Cet article présente un cas de manipulation des rapports financiers visant à éviter une baisse du résultat comptable perçue comme défavorable. En dépit du lien posé habituellement entre l'information comptable retraitée et l'efficience du marché, l'organisation a changé le taux de d'amortissement de ses actifs sans toutefois en faire état dans ses comptes financiers. Ce changement de méthode d'amortissement des bâtiments intervenait dans un contexte limitant les possibilités de gestion des actifs, et de croissance significative des prêts sous hypothèques. Les problématiques de la certification des comptes sont examinées, de même que l'évolution à moyen terme de la performance de cette société de construction comparativement à ses concurrentes.

Suggested Citation

  • Batiz-Lazo, Bernardo, 2006. "Changes In The Depreciation Of Buildings In An English Building Society, Circa 1959: Financial And Governance Implications," MPRA Paper 4617, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:4617

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    References listed on IDEAS

    1. Dye, Ronald A. & Magee, Robert P., 1991. "Discretion in reporting managerial performance," Economics Letters, Elsevier, vol. 35(4), pages 359-363, April.
    2. Andrew E. Baum, 1993. "Quality, Depreciation, and Property Performance," Journal of Real Estate Research, American Real Estate Society, vol. 8(4), pages 541-566.
    3. Nelson, Karen K. & Barth, Mary E. & Cram, Donald, 2001. "Accruals and the Prediction of Future Cash Flows," Research Papers 1594r, Stanford University, Graduate School of Business.
    4. Alain Burlaud & Michel Messina & Peter Walton, 1996. "Depreciation: concepts and practices in France and the UK," European Accounting Review, Taylor & Francis Journals, vol. 5(2), pages 299-316.
    5. Bernardo Batiz-Lazo, 2004. "Strategic alliances and competitive edge: insights from Spanish and UK banking histories," Business History, Taylor & Francis Journals, vol. 46(1), pages 23-56.
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    More about this item


    Keywords: Depreciation; asset management; building societies; United Kingdom; corporate governance. Mots clés: Amortissement; gestion de actifs; sociétés de construction; Grande-Bretagne; gouvernance d'entreprise;

    JEL classification:

    • N24 - Economic History - - Financial Markets and Institutions - - - Europe: 1913-
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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