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Economic Crisis and Accounting Evolution

59 Pages Posted: 5 Mar 2011  

Gregory B. Waymire

Emory University - Goizueta Business School

Sudipta Basu

Temple University - Department of Accounting

Date Written: March 1, 2011

Abstract

We study changes in financial reporting around economic crises from a historical perspective through the lens of punctuated equilibrium evolution. Historical evidence and contemporary economic analyses indicate that corporate financial reporting plays a minor role in precipitating economic crises but might help amplify them. Economic crises likely play a role similar to major shocks in biological environments by selecting accounting practices, accounting principles, firms and regulatory institutions for survival based on how well they adapt to post-crisis environments. Conscious attempts to improve accounting in the wake of crises, whether through market or political forces, may not prove as beneficial as hoped because we currently know far too little about the causes of economic crises or the consequences of abrupt changes to complex adaptive systems such as accounting. We outline several questions for future research.

Keywords: selection, transformation, migration, unintended consequences, pretense of knowledge

JEL Classification: M41, B25

Suggested Citation

Waymire, Gregory B. and Basu, Sudipta, Economic Crisis and Accounting Evolution (March 1, 2011). Emory Law and Economics Research Paper No. 11-98. Available at SSRN: https://ssrn.com/abstract=1775044 or http://dx.doi.org/10.2139/ssrn.1775044

Gregory B. Waymire (Contact Author)

Emory University - Goizueta Business School ( email )

Goizueta Business School
1300 Clifton Road
Atlanta, GA 30322
United States
404-727-6589 (Phone)
404-727-6313 (Fax)

Sudipta Basu

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States
215.204.0489 (Phone)
215.204.5587 (Fax)

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