A Critique of Shareholder Value
The Cournot Centre series
5. Accounting, ﬁnance and the ﬁrm The preceding chapters focused on the question of corporate governance, that is to say, the power structures of listed companies. The rise to power of financial markets expresses itself in the opening up of these structures to a shareholder logic: the development of stock options and instruments for the measurement of shareholder value, the liberalization of the takeover market, institutional activism, emphasis on the independence of administrators, and so on. From a theoretical viewpoint, governance appears as the central mediation channel between f rms and ﬁnancial markets. We turn ﬁ f our attention next to a second mediation: corporate accounting. As a f rstﬁ order cognitive resource on the activities of ﬁrms, accounting is essential to ﬁnancial market information, which is interested in forecasting future corporate performance. Interactions play equally in the other direction: what happens in capital markets can inﬂuence the accounting representation of the company. If the technicality of debates on governance often causes the importance of the underlying issues (deﬁnition of the company, capital–work relationship, etc.) to be lost from view, this is even truer of accounting. The adoption of one particular accounting language over another is the adoption of a corporate representation: the nature of the information that is produced about an activity depends very largely on the idea one has or wishes to convey of this activity. Thus in a complex syntax, which too often makes the theme accessible only to experts, there are hidden essential questions...
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