THE RISE AND FALL OF COMPREHENSIVE ACCOUNTING THEORIES: R. J. CHAMBERS AND CONTINUOUSLY CONTEMPORARY ACCOUNTING By Martin Emanuel Persson Thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Philosophy in Management at Royal Holloway, University of London. July 2013 1 DECLARATION OF AUTHORSHIP I, Martin Emanuel Persson, hereby declare that this thesis and the work presented in it is entirely my own. Where I have consulted the work of others, this is always clearly stated. Signed: Date: 02-07-13 2 To Anh and all the things we have yet to do 3 ACKNOWLEDGEMENTS A letter from Stephen Zeff to Raymond J. Chambers fell off a boat delivering mail between Fiji and Australia in the 1970s. The letter was never recovered. My experience when I began my doctoral studies was similar to that of this letter, and I surely would not have been recovered had it not been for the people around me. I want to thank my supervisor Christopher Napier and my advisor Chris Nobes. Their guidance has helped me write the best possible dissertation that I could muster. Napier, in particular, fielded over 400 emails and held more meetings than I can count during a three-year period. I also want to give special thanks to Graeme Dean and Stephen Zeff. I would not have been able to access much of the data used in this dissertation without their assistance and their invitations for me to visit the University of Sydney and Rice University, respectively. I hope that they will be able to derive some pleasure from reading the final product of their hard work. I also want to thank everyone else that has assisted me in collecting all the data used in this dissertation: Brian Rutherford, Brian West, Dale Flesher, Frank Clarke, Garry Carnegie, James McKeown, Kenneth Peasnell, Michael Gaffikin, Michael Mumford, Michael Scorgie, Murray Wells, Pelham Gore, Peter Wolnizer, Philip Brown, Richard Morris, and Sid Gray. This dissertation would not have been possible without the financial support from the Academy of Accounting Historians, which awarded me the Margit F. & Hanns Martin W. Schoenfeld Scholarship in Accounting History in 2012, and Royal Holloway, University of London, which supported me with a research and a pump- priming grant as well as a research and a maintenance scholarship. I am most grateful for this support. Christopher Napier and Chris Nobes have read and commented on all parts of the dissertation. Stephen Zeff has read and commented on some of the empirical chapters. Numerous discussants have commented on parts of the dissertation during three conferences in the UK, Germany, and Canada. All errors that remain are those of my own. Signed: Martin Emanuel Persson Date: 02-07-13 4 ABSTRACT The thesis is an exploratory study of the gap between accounting research and financial reporting practices. The fundamental issue is that comprehensive accounting theories (CATs) have been largely disregarded in the formation of financial reporting practices. To understand why this should be so, the thesis studies continuously contemporary accounting (COCOA), the CAT associated with the Australian scholar Raymond John Chambers. The thesis adopts a hyperbolic reading of actor-network theory (ANT), which treats ANT on its own terms rather than diluting it by reference to other interpretive approaches. The thesis uses a single case-study approach that traces how Chambers developed what was to become COCOA throughout his life. Archival data and interviews, as well as primary and secondary literature, inform the empirical narrative. The narrative focuses on six distinct episodes: the publication of Chambers’ first academic article in 1955, the debate and events that followed this article, attempts to influence financial reporting practices in the US in the 1960s, the publication of Chambers’ most comprehensive statement on COCOA in 1966, further attempts to influence financial reporting practices in the US, UK, and Australia in the 1970s, and three instances where financial statements were prepared in accordance with COCOA in the 1970s. Through the empirical narrative, the thesis contributes to knowledge about the gap between accounting research and financial reporting practices by studying an actual CAT and the attempts of its proponent to change conventional thinking. What emerges is a nuanced narrative about COCOA filled with various actors, not normally associated with accounting research, that nonetheless turn out to be vital to the success of COCOA. 5 TABLE OF CONTENTS DECLARATION OF AUTHORSHIP ........................................................................... 2 ACKNOWLEDGEMENTS ........................................................................................... 4 ABSTRACT ................................................................................................................... 5 LIST OF DIAGRAMS ................................................................................................. 10 LIST OF ABBREVIATIONS ...................................................................................... 11 DRAMATIS PERSONÆ ............................................................................................. 14 CHAPTER ONE: ACCOUNTING RESEARCH AND FINANCIAL REPORTING 19 Research Objectives ................................................................................................. 20 CATs in the literature ............................................................................................... 22 Literature about CATs .............................................................................................. 26 Conclusion ................................................................................................................ 29 CHAPTER TWO: HYPERBOLIC ACTOR-NETWORK THEORY ......................... 32 ANT and Accounting ................................................................................................ 32 Theoretical Framework ............................................................................................. 36 Evaluating the Narrative ........................................................................................... 40 Conclusion ................................................................................................................ 45 CHAPTER THREE: MESSY DATA, METHODS AND HISTORY ........................ 48 Messy Data ............................................................................................................... 48 Messy Methods ......................................................................................................... 57 Messy History ........................................................................................................... 60 Conclusion ................................................................................................................ 64 6 CHAPTER FOUR: COCOA’S FIRST THREE TRIALS OF STRENGTH ............... 67 Prologue .................................................................................................................... 67 Raymond John Chambers. ..................................................................................... 67 The COCOA label. ................................................................................................ 69 Three Trials of Strength ............................................................................................ 70 Inflation. ................................................................................................................ 72 English-language accounting literature. ................................................................ 75 Accounting Research. ............................................................................................ 81 A COCOA Blueprint ................................................................................................ 86 Conclusion ................................................................................................................ 90 CHAPTER FIVE: ESTABLISHING COCOA (ABROAD) ....................................... 93 Debating COCOA ..................................................................................................... 94 Australia. ............................................................................................................... 94 US. ......................................................................................................................... 96 COCOA Abroad ..................................................................................................... 103 Funding and other arrangements. ........................................................................ 104 Transportation. .................................................................................................... 110 Chambers’ itinerary. ............................................................................................ 111 Towards COCOA ................................................................................................... 117 Conclusion .............................................................................................................. 121 CHAPTER SIX: VICARIOUS NEGOTIATIONS WITH REGULATIONS ........... 123 Competing OPPs for Financial Reporting Practices ............................................... 124 COCOA. .............................................................................................................. 124 AICPA’s postulates and principles. ...................................................................