Skip navigation
Skip navigation

Accounting Manipulations and Political Costs: Tooth & Co. Ltd 1910-65

Wilson, Mark; Shailer, Gregory

Description

Positive accounting theory posits that political costs influence accounting choices by large firms. Most studies rely on cross-sectional analyses of large samples using coarse data. We employ rich archival data to analyse the profit measurement and disclosure practices of Tooth & Co, a large Australian brewing company, from 1910 to 1965. This period provides considerable variation in scope and incentives to manipulate reported profit. Reporting discretion changed significantly from early...[Show more]

dc.contributor.authorWilson, Mark
dc.contributor.authorShailer, Gregory
dc.date.accessioned2015-12-08T22:33:47Z
dc.identifier.issn0001-4788
dc.identifier.urihttp://hdl.handle.net/1885/34806
dc.description.abstractPositive accounting theory posits that political costs influence accounting choices by large firms. Most studies rely on cross-sectional analyses of large samples using coarse data. We employ rich archival data to analyse the profit measurement and disclosure practices of Tooth & Co, a large Australian brewing company, from 1910 to 1965. This period provides considerable variation in scope and incentives to manipulate reported profit. Reporting discretion changed significantly from early voluntary disclosure through to the extensive scheduled disclosure requirements of the Companies Act 1961. Varying incentives include changes in excise duties levied on beer production, and dramatic company growth and market dominance resulting from takeovers of competitors and vertical integration. We examine the pattern of reported profit in relation to internal records and the pattern of accruals. We find that Tooth's profit-smoothing practices and understatements were perceived by management as important in justifying dividend policy, while systematic understatements of reported profit were used to avoid potential political costs associated with high profitability and market dominance. The most significant relative increases in profit understatement are shown to occur where dividend policy and political cost motivations coincide.
dc.publisherInstitute of Chartered Accountants in England and Wales
dc.sourceAccounting and Business Research
dc.subjectKeywords: Accounting history; Brewing industry; Earnings management; Income smoothing; Political costs
dc.titleAccounting Manipulations and Political Costs: Tooth & Co. Ltd 1910-65
dc.typeJournal article
local.description.notesImported from ARIES
local.identifier.citationvolume37
dc.date.issued2007
local.identifier.absfor150106 - Sustainability Accounting and Reporting
local.identifier.ariespublicationu4319152xPUB117
local.type.statusPublished Version
local.contributor.affiliationWilson, Mark, College of Business and Economics, ANU
local.contributor.affiliationShailer, Gregory, College of Business and Economics, ANU
local.description.embargo2037-12-31
local.bibliographicCitation.issue4
local.bibliographicCitation.startpage247
local.bibliographicCitation.lastpage265
dc.date.updated2015-12-08T09:38:19Z
local.identifier.scopusID2-s2.0-36849008639
CollectionsANU Research Publications

Download

File Description SizeFormat Image
01_Wilson_Accounting_Manipulations_and_2007.pdf1.26 MBAdobe PDF    Request a copy


Items in Open Research are protected by copyright, with all rights reserved, unless otherwise indicated.

Updated:  19 May 2020/ Responsible Officer:  University Librarian/ Page Contact:  Library Systems & Web Coordinator