CORPORATE SCANDALS AND CRITICAL PERSPECTIVE OF ACCOUNTING Topic Lecture-18 CORPORATE SCANDALS AND CRITICAL PERSPECTIVE OF ACCOUNTING 9 Readings Reference : Text chapter 12: Critical Perspectives of Accounting; Financial Accounting Theory; McGraw-Hill; 2nd Edition; 2006; pp 427-449. 2/26/2018

Critical accounting research versus social and environmental accounting research The political economy perspective perceives accounting reports as social, political and economic documents They serve as a tool for constructing, sustaining and legitimizing economic and political arrangements, institutions and ideological themes which contribute to the organisation's private Interests. Guthrie & Parker(1990) Because corporate social reporting (CSR) will be controlled by the reporting corporations and a State which has a vested interest in keeping things more or less as ,they are, CSR has little radical content. Furthermore, CSR may do more harm than good because it gives the impression of concern and change but, in fact, will do no more than allow the system to 'capture' the radical elements of, for example, socialism, environmentalism or feminism and thus emasculate them. Gray, Owen and Adams(1996) 2/26/2018

Disclosure of social responsibility information Critical accounting research versus social and environmental accounting research As accounting deemed to sustain particular social structures, introduction of new forms of accounting only help to sustain that social system Considered wasted effort to use accounting to solve problems … one is using the very process (current economics and accounting) that caused the problem (environmental crisis) to try to solve the problem. This is known as the process of ‘juridification and it is well established that one is unlikely to solve a problem by applying more of the thing which caused the problem. Disclosure of social responsibility information 2/26/2018

Possible impact of critical accounting research on social practice The 'radical feminists', believe that accounting maintains and reinforces masculine traits such as the need for success and competition and that accounting acts to reduce the relevance of issues such as cooperation, respect , compassion and so forth . The masculine versus feminine dichotomy where various societal values were considered in the context of international accounting and how a country ranking in terms of 'masculinity' or 'femininity' in tum influenced the national accounting practices being adopted. According to Hofstede (] 984): 2/26/2018

Possible impact of critical accounting research on social practice Masculinity stands for a preference in society for achievement, heroism, assertiveness, and material success, its opposite, Femininity, stands for a preference for relationships, modesty, caring for the weak, and the quality of life Researchers working with the feminist literature argue for the need for accounting to be less ‘masculine and more ‘feminine’ in operation. According to Reiter(1995) Feminist theory has many voices, and the considerable volume of feminist criticism published to date represents many different viewpoints. In the late 1980;’s accounting scholars began exploring the Idea that feminist theory could be used to critique accounting. 2/26/2018

Possible impact of critical accounting research on social practice In relation to economic theory Economic theories tend to value the characteristic associated with masculine stereotypes such as abstraction, mind, efficiency equilibrium. rationality pursuit of self interest and autonomy, The opposite characteristics of concretism , body, randomness., humanity, mutuality and connectedness, which are associated stereotypes, are missing from economic theory. A critical approach to accounting however, starts from the premise that problems in accounting are potentially reflections of problems in and of society and accordingly that the latter should be critically analyzed. Thus If a major problem in accounting is identified, say as its overwhelming orientation to investors, then a critical prospective would suggest that this problem is a reflection of society orientation and to change accounting practice requires both social awareness (e g. identification of alternative ‘accounts' and the roles of accounting in society) and ultimately social change. Cooper and Shere (1984) 2/26/2018

A CRITICAL ACCOUNTING VIEW ON THE ACTIVE ROLE OF ACADEMIC AND NON-ACADEMIC DISCOURSE IN PROTECTING CAPITALISM In another area, some critical theorists; have implicated the editors of accounting journals in ensuring that accounting research does not challenge the interests of dominant groups in society, arguing that these editors will reject research that does not have 'complementarity with themes prevailing in the social milieu‘ (Mouck,1982) Accounting literature represents the world in a manner conducive to the changing needs of capital accumulation Journals such as Accounting Review adjudicate in secondary conflicts by filtering research ,scholarship (and untendered scholars) in a manner conducive to this primary purpose. 2/26/2018

A CRITICAL ACCOUNTING VIEW ON THE ACTIVE ROLE OF ACADEMIC AND NON-ACADEMIC DISCOURSE IN PROTECTING CAPITALISM Critical theorists see conceptual frameworks as legitimising the accounting profession and of financial reports produced by reporting entities Accountants seen as imposing their own views about which performance characteristics are important or not important 2/26/2018

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