Equity theories and financial reporting: past, present and future

van Mourik, Carien (2010). Equity theories and financial reporting: past, present and future. In: 22nd Annual Conference on Accounting, Business & Financial History, 6-7 Sep 2010, Cardiff.

URL: http://www.cardiff.ac.uk/carbs/conferences/abfhc10...


This paper has three aims. Firstly, to remind accounting academics, practitioners and standard setters of the origins and the substance of the equity theories and the debate surrounding them that took place from the late 19th century until the 1970s. Secondly, it seeks to understand why the equity theories do not play a role in current financial accounting and reporting theory, regulation and practice. It argues that never in history has there been a greater need to pick up the search for a comprehensive theory of financial accounting because international financial reporting standards are a reality in today’s world, and their development is in the hands of the International Accounting Standards Board (IASB). Thirdly, it sketches the outline of a possible comprehensive theory of financial accounting and explains what we can and cannot expect from such a theory. We need a comprehensive theory of accounting because we need to improve our understanding of how different viewpoints of the publicly held corporation might impact income determination models and disclosure and valuation paradigms, and of the economic and social consequences that accounting and reporting according to the different viewpoints may have. Assuming that the IASB truly has the international public interest in mind, such understanding might impact the IASB Conceptual Framework and international financial accounting and reporting standards in the future.

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