Accounting Choices and Reported Financial Performance: The UK Gas Industry

McInnes, William McKenzie (1987) Accounting Choices and Reported Financial Performance: The UK Gas Industry. PhD thesis, University of Glasgow.

Abstract

This study investigates the accounting choices made for the UK gas industry during the eleven years from 1 April 1969 to 31 March 1980. The general research question on which the study focuses is : What was the effect of these accounting choices on the gas industry's reported financial performance and what factors explain these choices and the gas industry's lobbying behaviour on proposed accounting standards. The theoretical foundation for the study is the US literature on accounting and the political process. However, as the institutional and political environment of the UK gas industry was different from that of any firm in the United States it has been necessary to adapt the investigation to take these differences into consideration. Each year of the study consists of evidence which is relevant to the research question; calculations of the effects of the accounting choices on reported financial performance; explanations for the accounting choices and where relevant, discussion of the gas industry's lobbying behaviour. The main findings of this study are: 1. When there was a perceived need to either justify or reduce criticism of a price rise accounting choices were made which reduced reported profit. 2. When there was a perceived need to avoid political costs accounting choices were made which reduced reported profit. 3. The impact of these income decreasing accounting choices on the gas industry's reported profits was significant. 4. The accounting choices made during the quinquennium ended 31 March 1974 appeared to undermine the intended usefulness of the comparison between the financial target for that period with the reported outcomes as a control mechanism. 5. The gas industry's lobbying behaviour on proposed accounting standards appeared to be aimed at decreasing future reported profits which was consistent with the approach adopted for the accounting choices made for the industry. This study has contributed to the fund of knowledge on the impact of the political process on accounting choices and has thereby contributed to the development of a positive theory of accounting choices.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Keywords: Accounting, Finance, Management
• Date of Award: 1987
• Depositing User: Enlighten Team
• Unique ID: glathesis:1987-77457
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 14 Jan 2020 11:53
• Last Modified: 14 Jan 2020 11:53
• URI: https://theses.gla.ac.uk/id/eprint/77457