Professional Knowledge and the Historical Emergence of Accounting Norms

52 Pages Posted: 13 Apr 2013 Last revised: 19 Apr 2014

See all articles by Sudipta Basu

Sudipta Basu

Temple University - Department of Accounting

Paul E. Madsen

University of Florida

David A. Reppenhagen

UNCC - Turner School of Accountancy

Gregory B. Waymire

Emory University - Department of Accounting

Date Written: April 11, 2013

Abstract

Accounting norms preceded generally accepted accounting principles (GAAP), but little is known about how and why these norms emerged. We hypothesize that private-sector institutions aimed at building a knowledge base among practicing accountants fostered accounting norms before formal standard-setters appeared in the 1930s. Establishing an association between knowledge-building institutions and accounting norms requires that we (1) identify the form and function of specific institutions that developed the professional knowledge base, (2) show that these institutions facilitated professional knowledge development, and (3) illustrate how knowledge acquisition, dissemination, and retention dynamically results in spontaneous emergence of homogeneous behavior indicative of a norm. We provide evidence of an association between knowledge-building institutions and accounting norms using a combination of historical analysis and simulation modeling techniques. While our focus is primarily historical, most of the institutions we investigate still operate today. Thus, our analysis clarifies how modern accounting is shaped by powerful forces that influence practices long before an accounting problem is considered by standard setters.

Keywords: knowledge sharing, norms, accounting profession, agent-based modeling

JEL Classification: C63, M40, N21, N22

Suggested Citation

Basu, Sudipta and Madsen, Paul E. and Reppenhagen, David A. and Waymire, Gregory B., Professional Knowledge and the Historical Emergence of Accounting Norms (April 11, 2013). Available at SSRN: https://ssrn.com/abstract=2249844 or http://dx.doi.org/10.2139/ssrn.2249844

Sudipta Basu

Temple University - Department of Accounting ( email )

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

Paul E. Madsen

University of Florida ( email )

Gainesville, FL 32611
United States

David A. Reppenhagen (Contact Author)

UNCC - Turner School of Accountancy ( email )

9201 University City Blvd
Charlotte, NC 28223
United States
7046875394 (Phone)

HOME PAGE: http://https://belkcollege.uncc.edu/directory/david-reppenhagen

Gregory B. Waymire

Emory University - Department of Accounting ( email )

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

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