Corporate Financial Statements, a Product of the Market and Political Processes

Australian Journal of Management, Vol. 4, April, 1977

42 Pages Posted: 21 Jul 2006

See all articles by Ross L. Watts

Ross L. Watts

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Abstract

An outline for a theory of financial statements is presented. Financial statements are viewed as products of both markets and political processes and the interactions among individuals and groups in these processes. Individuals are assumed to maximize their self-interests. Various hypotheses and data are provided to illustrate the theory. It relies heavily on theories of agency, economic regulation and public choice. At this stage, the theory has great promise in explaining the form and contents of financial statements. The theory contrasts with earlier normative theories of financial statements and offers an explanation for the forms they take.

Keywords: Financial reporting, accounting theory

JEL Classification: M41, M44, G34, G38, D82

Suggested Citation

Watts, Ross L., Corporate Financial Statements, a Product of the Market and Political Processes. Australian Journal of Management, Vol. 4, April, 1977. Available at SSRN: https://ssrn.com/abstract=918323

Ross L. Watts (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E52-325
Cambridge, MA 02142
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
1,233
rank
15,331
Abstract Views
7,165
PlumX Metrics