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Accounting for austerity: the Troika in the Eurozone

Author

Listed:
  • Sandra Cohen
  • María-Dolores Guillamón
  • Irvine Lapsley
  • Geraldine Robbins

Abstract

Purpose - – The purpose of this paper is to examine the impact of the Eurozone financial crisis by discussing the experiences of Greece, Ireland and Spain. It particularly examines the influence and actions of the Troika in the management of the sovereign debt crisis in the Eurozone. Design/methodology/approach - – The primary source of information for this study has been the documents of the Greek, Irish and Spanish Governments (often only available in their native language) and the reports of EU bodies and the IMF, supplemented by media coverage, as deemed appropriate. This has been analysed on a comparative basis to contrast the experiences of these three countries. Findings - – This study reveals how the Eurozone crisis has impacted on financially weak countries in this currency union. The fiscal conservatism of the Troika (the IMF, the EU and the European Central Bank) has had profound consequences for these economies, which have experienced dramatic cuts in public services. Research limitations/implications - – This study has focused on the experiences of three countries in the Eurozone. There is a case for extending this analysis to other Eurozone countries. Practical implications - – There are two approaches to recession – governments can stimulate demand by infrastructure spending or take the financial conservatism route of reducing public expenditure and public sector borrowing. However, the severity of the crisis undermines the first approach and there are uncertain outcomes with the second approach. This paper shows the effects of adopting financial conservatism as a strategy in this crisis. Social implications - – The austerity programmes pursued by the governments in this study have led to unemployment, migration of skilled workers, collapse in property markets, failing banks and social unrest. Originality/value - – This study takes an accounting perspective on the Eurozone crisis. This offers a distinctive interpretation of events. This study examines the merits of widely used theories in studies of public sector change namely legitimation and resource dependency theory intertwined with power and offers insights into how meaningful they are in explaining the dramatic influence of austerity programmes in the Eurozone.

Suggested Citation

  • Sandra Cohen & María-Dolores Guillamón & Irvine Lapsley & Geraldine Robbins, 2015. "Accounting for austerity: the Troika in the Eurozone," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 28(6), pages 966-992, August.
  • Handle: RePEc:eme:aaajpp:v:28:y:2015:i:6:p:966-992
    DOI: 10.1108/AAAJ-04-2014-1668
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    Citations

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    Cited by:

    1. Pasquale Ruggiero & Daniela Sorrentino & Riccardo Mussari, 2022. "Earnings management in state-owned enterprises: bringing publicness back in," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 26(4), pages 1277-1313, December.
    2. Carr, Michelle & Beck, Matthias, 2022. "Accounting practices and professional power dynamics during a crisis," The British Accounting Review, Elsevier, vol. 54(3).
    3. Canale, Rosaria Rita & De Simone, Elina & Spagnolo, Nicola, 2021. "Financial markets and fiscal discipline in the Eurozone," Structural Change and Economic Dynamics, Elsevier, vol. 58(C), pages 490-499.
    4. Ferry, Laurence & Zakaria, Zamzulaila & Zakaria, Zarina & Slack, Richard, 2018. "Framing public governance in Malaysia: Rhetorical appeals through accrual accounting," Accounting forum, Elsevier, vol. 42(2), pages 170-183.
    5. Henderson, Elisa & Lambert, Vicky, 2018. "Negotiating for survival: Balancing mission and money," The British Accounting Review, Elsevier, vol. 50(2), pages 185-198.

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