Book Reviews: Trevor Hooper, Mathew Tsamenyi, Shahzad Uddin and Danture Wickramasinghe (eds.), Handbook of Accounting and Development (Elgar, 2012)

Abstract

Martin Shubik (2002, p.1) describes bookkeeping, accounting and auditing as “the stepchildren of economic theory.” He laments the divergence between accounting and economics (the slicker version of the descriptively more accurate title of “political economy”), and calls for a convergence between the two sister disciplines. This divergence has, indeed, been a long one except for a few episodic interdisciplinary Ph.D. dissertations (e.g., Paton 1922; Canning 1929; Feroz 1982), and a rather asymmetrical and somewhat tense relationship between accounting and another younger sibling, namely, modern finance (Cunningham 2005).

The collection of essays under review is a welcome addition to the accounting literature in that they articulate a relationship between accounting and development within the broader context of the social sciences. The authors seem to be arguing for broadening the mainstream accounting discourse to include developing and less developed countries (LDCs), in addition to the very developed Anglo-American market-based economies where modern finance theories (e.g., portfolio theory, CAPM and EMH) originated and flourished. While this may disturb the current balance of power by raising some unsettling issues about the allocation of American Accounting Association-sponsored journal spaces and other resources, it is a discussion worth having at some point, since much of the mainstream accounting research seems to be so far removed from the issues that are of interest to LDCs.

One counter argument to the authors' point of view might be that, with the rising tide of emerging capital markets “everyone is better off” because of the so called, “trickle-down effect.” However, as the authors document here and elsewhere, not everyone might be as well-off at the same time, and with the same speed and direction. Certainly, not in the LDCs where the proportional increase in the size of financial capital markets does not automatically correspond with a proportional decrease in poverty.

Since there have been only a few theoretical breakthroughs on the growth theory (Solow 2007), and on the socio-economic and political developments in the LDCs ever since the controversial population control prescriptions of Malthus (1809), the essays under review are understandably exploratory and largely normative in their scope. They, however, cover a wide range of topics, including, but not limited to, the traditional role of multinational companies (MNCs, Chapter 15), role of donors (Chapter 2), transnational institutions (Chapter 4), auditors (Chapters 5 and 7), privatizations (Chapter 12), taxation (Chapter 14), emerging capital markets (Chapter 8), transfer pricing (Chapter 15), corruption (Chapter 13), microfinance institutions (MFI, Chapter 10), and social and environmental accounting (Chapter 16). While their breadth of coverage is impressive, one still notes the absence of entries on traditional topics, such as national income accounting — a topic that is, by consensus if not by default, covered more often in an economics textbook than in a governmental accounting text. Other missing entries relate to more recent developments on productivity growth accounting (e.g., Raab and Feroz, 2007) reflecting, in part, the interests of the contributors to this volume.

The papers under review defy any natural clustering except that they all relate to the common theme of accounting and development. I review them on a selective basis, keeping in mind the editors' sequencing of them. While all of the 16 chapters are well-written and worth reading for anyone interested in the sub-field, especially ambitious graduate students looking for opportunities to make major interdisciplinary breakthroughs, I focus on the following subset for space constraints only...

Last, but not the least, if the stated objective of the authors is to convince the editors of The Accounting Review to publish more “research on accounting in less developed countries” (p. 1), this book may not be of much help except to register the topic on the editorial radar, which is obviously important. First of all, the authors need to consider the common body of knowledge shared by most accounting reviewers. Very few, if any, accounting doctoral programs in America offer a course on the intersection of accounting and development. The predominantly British Commonwealth-based institutional affiliations of the contributors to this book are indirect testimony to that effect. It is not surprising that some U.S. journal editors may even have a problem in identifying accounting faculty who are both qualified and interested in reviewing papers on this topic.

Secondly, most top-tier accounting journals, including The Accounting Review, Journal of Accounting Research, and Journal of Accounting and Economics, insist on mathematically sophisticated (analytical) and/or empirically verifiable and hard data-driven studies. This is, in part, a reflection of Karl Popper's and Thomas Kuhn's philosophy of science tradition permeating most doctoral training programs in America, at least, since the World War II.

One may not agree with the narrow topical coverage, and methodological or philosophical orientation, of some top-tier accounting journals. However, in the short run encouraging freshly minted Ph.D.s or doctoral students to undertake empirical and/or analytical research studies that might sustain a rigorous review process at top-tier accounting journals might be a more fruitful strategy in advancing the sub-field of accounting and development. In the long run, one hopes that the long divergence between accounting and political economy will be reconciled at a family get-together on the basis of mutual respect and in the spirit of gaining some knowledge and disseminating knowledge that truly benefits humanity.

Keywords: Accounting, Development, Growth Theory, Political Economy, Accounting and Economics

JEL Classification: L3, M4, P16