Professional Documents
Culture Documents
A COOKS TOUR
By Matt Tilling
School of Commerce
Flinders University
South Australia
School of Commerce
Research Paper Series: 01-9
ISSN: 1441-3906
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moral society this power must be carefully considered and moderated
and used with responsibility. This gives light to an important role for
academics, to continually question the domain of accounting practice,
and how its power is exercised. Careful consideration must be given
to the effects that accounting information has on society and, perhaps
more importantly, empowering society to interpret accounting for the
tool it is.
Francis (1990) has pointed out that accounting as a practice is
so much more than a mere reporting of the facts. Accounting is a
discourse, where the accountant chooses what to say, who to say it to,
and how to say it. The accountant is empowered to highlight or
emphasise certain issues, minimise or eliminate others, and in the
process, affect peoples decisions and behaviour. Explicit recognition
of accounting's status as a discursive practice (as opposed to the view
that accountants just report the facts) is profoundly important
because it forces accountants to acknowledge their own personal
involvement, their own moral agency and rhetorical role, in the
production and creation of accounting reports (Francis, 1990, p. 5).
At the same time, however, just as accountants make choices
about reports, so society as a whole makes choices about which
discourses it will acknowledge. Lehman and Tinker (1987, p. 509)
discuss the fact that the amplitude of an accounting theme depends
on its capacity to enlist, echo, harmonize with, and resonate with
other themes prevailing in the discursive environment. In other
words, accounting can influence the decisions that people in society
make, but it cannot necessarily set the social agenda. Within society
there is a growing awareness that the bottom line and other purely
economic issues, so favoured historically by accounting, may not be
enough upon which to judge a firms performance, or base a decision.
Issues associated with quality of life are also an important
consideration (Harte, Lewis and Owen, 1991).
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There must be a continual dialogue between accounting
researchers, accounting practitioners and society. In this way the
practice of accounting can be moderated between the desires of
various groups. Unfortunately there is strong evidence of a large
divide between each of these three participants (Bricker, 1990),
particularly in their understanding and expectations of accounting
information. There are however, researchers in a few areas of
accounting research that do seem to be making an effort to work at
the interface, at least with society, at this point in time. One of the
movements in this direction has been labelled Corporate Social
Reporting (CSR) (also sometimes known as Corporate Social
Disclosure). It should be noted that in this paper CSR is deemed to
include disclosures of an environmental nature.
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4. External and internal information systems allowing
comprehensive assessment of all corporate resources and
impacts (social, environmental and economic).
A series of studies have shown that CSR by companies is
increasing. Deegan and Gordon (1996), focussing on environmental
disclosure practices, have conducted one of the most detailed studies
in Australia. They concluded that the amount of voluntary
environmental disclosures in Australia is typically low but that a
general increase in environmental disclosures occurred (p. 198)
over the 11 year period 1980 to 1991. In a UK based study, Gray et al.
(1995) found that for various categories of social disclosure (including
Environmental, Community and Health and Safety) the average
amount of disclosure had steadily increased from 1979 to 1991.
However they note The rise in social disclosure from a little over one
page to nearly four-and-a-half pages, it could be argued, may not be
something we should get too excited about (Gray et al., 1995, p. 68).
They do go on to argue that although CSR may be considered a
marginal activity, it is one that is worth studying, both in its own right,
and because it provides opportunities to consider the underlying
theory of accounting.
There has been a growing amount of research into CSR outside
of Australia, the UK and US. In recent literature, particular attention
has been paid to CSR in Europe and South East Asia. One study
conducted by Gamble et al. (1996) of 276 companies from 27
countries (and again limited to environmental disclosures) concluded
that over the relatively short period of 1989 to 1990 there was a
significant increase in individual and overall disclosures across all
countries (see also: Tsang, 1998 (Singapore); Andrew et al., 1989
(Malaysia and Singapore); Adams et al., 1998 (six Western European
countries)). It can be concluded that CSR is a global phenomenon, and
that increases reported in the UK, US and Australia are indicative of
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the increasing importance of these issues to accounting
internationally.
Two interesting points that have important ramifications for
those considering the CSR of companies have been noted by a number
of researchers. First, there is almost a total absence of any negative
information, and second, some of the information reported may in fact
be misleading.
In a study of 71 Australian firms, who were identified as
voluntarily producing environmental information, Deegan and Gordon
(1996) found that only 14 companies provided information that could
be classed as negative, and even then this disclosure was minimal.
They conclude that The environmental disclosures are typically self-
laudatory, with little or no negative disclosures being made by all
firms in the study (p. 198). This study supported earlier findings by
Guthrie and Parker (1990), who found in a study of Australian, UK and
US firms that absolutely no bad news was disclosed. In another study
Deegan and Rankin (1996) went as far as looking at firms who were
subject to successful prosecution by the Environmental Protection
Agency. These firms presumably had some bad news to disclose, yet it
was found that firms elected to promote positive environmental
attributes In most cases they failed to disclose any negative
environmental information (p. 6). This contrasts markedly with
research conducted within the mainstream (that is traditional,
economically focussed) financial accounting literature. Skinner (1994)
indicates that although companies face an asymmetric response to
negative disclosures (that is a disproportionately large drop in share
price), they are still likely to disclose to avoid legal suites. He also
notes that negative disclosures are much more likely to be made
qualitatively. It has been argued that this biasing of CSR should come
as no surprise. As has already been identified, accounting disclosure
is about control, and positive CSR disclosure may be just a deliberate
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effort to influence decision making. Just like other ideological
materials (party political statements, advertising, public relations
fluff, religious dogma) it is the repetition of the mundane and
particularly the censoring of other points of view that make these
reports most effective (Tinker et al., 1991, p. 39).
Some authors have gone even further. Not just suggesting that
the information provided by CSR is biased, but that it may in fact
misrepresent the actual situation. Harte and Owen (1991, p. 59)
indicate that social information provided within annual reports tends
not to be directly related to quality of actual performance and can
indeed be positively misleading. This concern was echoed by
Wiseman (1982) who concluded that voluntary environmental
disclosures could misrepresent a companys environmental
performance (also see Ingram and Frazier, 1980).
This situation may have significant ramifications for the long-
term viability of CSR. If questions of validity are raised often enough
it would seem logical to conclude that users may become reticent in
their use of such information. Such concerns have led to calls for
improving reporting and enhancing credibility via the introduction of
specific auditable information in the spirit of promoting public
accountability (Harte and Owen, 1991, p. 59).
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From the outset it needs to be appreciated that there is not a
single accepted approach to research in accounting (Chua, 1986). One
of the major problems for accounting theorists is the sheer complexity
of dealing with so many users who want an almost infinite variety of
data from accountants with which to undertake a variety of tasks. This
point has been highlighted by Aitken (1990, p. 224) who notes:
It is quite conceivable that thousands of events are likely
to be significant to different users and equally conceivable
that information needs are likely to be contradictory given
the fact that users are permitted (by a conscious policy of
the researcher not to become involved) to favour
particular information sets which condition events in a
way which is favourable to them (the users).
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CSR practice is a complex activity that cannot fully be explained by a
single theoretical perspective or from a single level of resolution.
Gray et al. (1995, p. 67) go on to note however, with regard to
research based on specific theories, that:
if such observations augment the attention given to an
increasingly widespread and complex activity and thereby
recognize the legitimacy of a wider range of voices in
corporate activity, then positive and worthy steps have
been taken to attempt to challenge the current corporate
hegemony and to expand the perspective of conventional
accounting.
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accounting has no unifying paradigm and a framework for adequate
disclosure is still not developed (p. 38). They go further to state that
Social accounting has suffered, therefore, from a lack of progress
and little consensus exists with regard to objectives, measurement
method and reporting framework (Zeghal and Ahmed, 1990, p. 38).
This view is perhaps a little pessimistic.
Tilt (1994) has outlined three broad positions for research in
CSR: the functionalist or neo-classical economic paradigm; the
interpretive or middle of the road paradigm; and, the radical,
critical or socio-political paradigm. It should be noted that these three
groupings really represent somewhat arbitrary divisions on a
continuum. However there does exist some degree of delineation. It is
interesting to note these three perspectives match very closely the
three broad arguments presented by Mathews (1993, p.9) as to the
importance of CSR. Firstly, market-related arguments, which hold that
additional disclosures are to be encouraged on the basis that
shareholders and creditors will benefit from a more responsive
market. Secondly, socially-related arguments which hold that
additional disclosures establish the moral nature of the corporation,
and therefore satisfy the implicit social contract between business and
society and to legitimate the organisation in the eyes of society.
Finally, radical-related arguments, which posit a whole new role for
accounting. It is not within the scope of this paper to adequately
explore these three paradigms, only acknowledge their existence. But
as a final note it is important to remember the point made by Deegan
(1997, p. 71), that all theories are simplifications of reality.
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practice rather than restricting their research to theories about
practice. This is to be achieved through the consideration of
normative issues. Researching theories for practice would
acknowledge normative issues - in the sense that all theoretical
development would be seen as having potential ethical implications
(Llewellyn, 1996, p.1). One of the most exciting and relevant models
for normative research in CSR is the Conditional - Normative theory.
The hallmark of a conditional - normative theory is the inclusion of
the objective as well as the instrumental hypotheses (i.e. the
empirically determined means-end relations), within the theoretical
framework (Mattessich, 1992, p. 190, emphasis in original). In this
framework conditions are placed upon the application of the
normative conclusion. If certain results are desired, and the
conditions meet certain requirements, then appropriate (normatively
determined) action is taken. The aim is to provide a range of tools for
practitioners to choose from, depending on preconceived and actual
needs (Mattessich, 1992, p. 190). This is an attempt to draw together
theory, practice and society, bridging many of the divides that have
been identified. It is perhaps pertinent to review Mattessichs (1992,
p. 192) final 3 points:
1. The time is ripe to unite accounting theory and societal
norms in a single theoretical framework but,
simultaneously, treat general empirical assumptions
differently from specific purpose - orientated hypotheses;
2. That academic accounting (as a whole) is an applied
science in which conditional - normative reasoning - i.e.,
the search for connecting efficient means with given ends
- ought to be at the very centre; and
3. Reject false pride, which the expression applied science
seems to injure. It is truth not appearance that counts.
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Theory is a means to an end; it provides a skeleton, upon which
research must be hung, but at the end of the day, although it supports
the thesis it is not the product.
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example, Baker and Hayes (1995) who focus on employee concerns).
The potentially broader role that accounting could play through the
identification, measurement, and communication of interactions
between the firm and society is slowly being recognised by
"managers, the media, politicians and the public" (Mathews, 1997, p.
481). In contributing broader information to more people this should
allow them to make better-informed decisions and contribute to a
better society. Yet there is still a long way to go.
REFERENCES
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Western Europe: Legitimating Corporate Behaviour?, British Accounting
Review, Vol. 30, No. 1, pp. 1 - 21.
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Practices in Developing Countries: The Case of Malaysia and Singapore, British
Accounting Review, Vol. 21, No. 1, pp. 371 - 376.
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Chua, W. (1986), Radical Developments in Accounting Thought, Accounting Review,
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