Some Conceptual Tensions in Financial Reporting

Accounting Horizons, Volume 26, Issue 1 (March 2012)

University of Alberta School of Business Research Paper No. 2013-1003

Posted: 19 Sep 2011 Last revised: 12 Jun 2013

See all articles by Yuri Biondi

Yuri Biondi

French National Center for Scientific Research (CNRS)

Jonathan C. Glover

Columbia Business School

Karim Jamal

University of Alberta - Department of Accounting, Operations & Information Systems

James A. Ohlson

Hong Kong Polytechnic University - School of Accounting and Finance

Stephen H. Penman

Columbia Business School - Department of Accounting

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

Eiko Tsujiyama

Waseda University - Graduate School of Commerce

Date Written: September 19, 2011

Abstract

We examine four key conceptual tensions that are at the heart of many financial reporting dilemmas: stocks vs. flows, ex-ante vs. ex post, conventions vs. economic substance, and top-down design vs. bottom-up evolution as sources of accounting practice. Associated with each of these conceptual dimensions is an accounting duality; in some cases one side (e.g., stocks) is easier to measure in a reliable manner, while the other side (e.g., flows) is easier to measure in other instances. We suggest that financial reporting would benefit from a willingness to pay attention to, and find compromise between both sides of these tensions; forcing a choice of one over the other does not serve to improve financial reporting.

Keywords: conceptual tensions, stocks-flows, ex ante, ex post, conventions-economic features, design-evolution

JEL Classification: M40

Suggested Citation

Biondi, Yuri and Glover, Jonathan C. and Jamal, Karim and Ohlson, James A. and Penman, Stephen H. and Sunder, Shyam and Tsujiyama, Eiko, Some Conceptual Tensions in Financial Reporting (September 19, 2011). Accounting Horizons, Volume 26, Issue 1 (March 2012); University of Alberta School of Business Research Paper No. 2013-1003. Available at SSRN: https://ssrn.com/abstract=1930610

Yuri Biondi

French National Center for Scientific Research (CNRS) ( email )

IRISSO - University Paris Dauphine PSL
Place Marechal Lattre Tassigny
75016 Paris
France

HOME PAGE: http://yuri.biondi.free.fr/

Jonathan C. Glover

Columbia Business School ( email )

3022 Broadway
New York, NY 10027
United States
212-854-1911 (Phone)

Karim Jamal (Contact Author)

University of Alberta - Department of Accounting, Operations & Information Systems ( email )

Edmonton, Alberta T6G 2R6
Canada
780-492-5829 (Phone)
780-492-3325 (Fax)

James A. Ohlson

Hong Kong Polytechnic University - School of Accounting and Finance ( email )

M715, Li Ka Shing Tower
Hung Hom, Kowloon
China

Stephen H. Penman

Columbia Business School - Department of Accounting ( email )

3022 Broadway
New York, NY 10027
United States
212-854-9151 (Phone)
212-316-9219 (Fax)

Shyam Sunder

Yale University - School of Management ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)

HOME PAGE: http://www.som.yale.edu/faculty/sunder/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Eiko Tsujiyama

Waseda University - Graduate School of Commerce ( email )

1-6-1, Nishi-Waseda
Shinjuku-ku, Tokyo 169-8050
Japan
81-3-5286-2048 (Phone)
81-3-3203-7067 (Fax)

HOME PAGE: http://www.waseda.jp/gradcom/index-e.html

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