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Accounting and the Truth of Earnings Reports: Philosophical Considerations


Norman B. Macintosh


Queen's University

July 3, 2008

Queen's School of Business Research Paper No. 05-08

Abstract:     
This essay investigates the philosophical nature of accounting reports of earnings. Standard setters' authoritative pronouncements [conceptual frameworks, GAAP, EITFs, etc.] hold to the realist philosophical view that true earnings reports are ex post representations of some ex ante out-there, preexisting, extralinguistic real economic increase in the enterprise's wealth. Contra this view, in practice financial accounting executives, in league with investment analysts, routinely engage in the earnings management and manipulation in order to satisfy the capital market's insatiable demands for earnings levels which will support and enhance the enterprise's stock market price.

The essay considers this state of affairs from Harold Frankfurt's [2005, 2006] truth, lies, and bullshit treatise. It sees earnings reports as short of lies, and so the accountants can only be faulted for their indifference to the truth and for giving the impression that they are trying to present the truth. A poststructuralist philosophical perspective, however, problematizes this conclusion on the basis that accounting language is not a transparent medium but rather is the material used to manufacture accounting truths. It sees accounting truths as contingent upon linguistic doctrinal accounting discourses currently ceded place of privilege by standard setters and upon the subjective considerations of accountants when they produce reports of earnings. The essay concludes that both Frankfurt's perspective and that of poststructuralist philosophers can provide valuable insights into this process.

Number of Pages in PDF File: 39

JEL Classification: M10, M43, M44, G31

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Date posted: July 6, 2008 ; Last revised: November 13, 2008

Suggested Citation

Macintosh, Norman B., Accounting and the Truth of Earnings Reports: Philosophical Considerations (July 3, 2008). Queen's School of Business Research Paper No. 05-08. Available at SSRN: http://ssrn.com/abstract=1155184 or http://dx.doi.org/10.2139/ssrn.1155184

Contact Information

Norman B. Macintosh (Contact Author)
Queen's University ( email )
Kingston, Ontario
613-545-2334 (Phone)
613-545-6847 (Fax)

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