Description
Introducing a group of essays and articles on the implications of the current economic and
financial crisis for accounting practice and research, this article provides an overview of
some of the principal issues and themes. Noting that very little research has been done
on the management accounting implications of such crises, particular consideration is
given to exploring the significance of and potential for research on this topic. Drawing
on unpublished research and personal experiences, the importance of having a wider
understanding of an organization’s information environment is stressed.
The economic crisis and accounting: Implications for the
research community
Anthony G. Hopwood
*
Saïd Business School, University of Oxford, Park End Street, Oxford OX1 1HP, United Kingdom
a r t i c l e i n f o a b s t r a c t
Introducing a group of essays and articles on the implications of the current economic and
?nancial crisis for accounting practice and research, this article provides an overview of
some of the principal issues and themes. Noting that very little research has been done
on the management accounting implications of such crises, particular consideration is
given to exploring the signi?cance of and potential for research on this topic. Drawing
on unpublished research and personal experiences, the importance of having a wider
understanding of an organization’s information environment is stressed.
Ó 2009 Elsevier Ltd. All rights reserved.
The current economic and ?nancial crisis has signi?cant
implications for accounting, both for practice and for the
research community. In the areas of ?nancial accounting,
auditing, management accounting and the regulatory insti-
tutions that oversee accounting and auditing practices
there are genuine worries that the crisis has revealed
numerous problems and inadequacies. In the academic
and research community it certainly has illuminated issues
that are in need of serious research attention. More than
that, however, the crisis also points to the rather limited
focus of much current accounting research. Too much
intellectual inquiry in the area of accounting seems to
operate within the parameters set by practice rather than
questioning and challenging these, at least from time to
time. Although the implications for research in accounting
may not be so great as that within the ?nance research
community where the serious lack of critical research is
much more visible, a more detailed consideration of the
implications of the crisis for accounting research neverthe-
less points to the need for a more rigorous investment in
diverse research perspectives rather than an unquestioned
following of a singular mainstream view.
So, for example, the move to fair value accounting is al-
ready being hotly debated, embroiling not only national
accounting regulators but also the already increasingly
challenged International Accounting Standards Board.
Whilst one strand of research has most certainly encour-
aged moves in this direction, there is now an emerging
interest in looking at the actual ways in which the changes
were realised. How, in other words, have very abstract con-
ceptual ideas been realised in practice, howhave the inher-
ent ambiguities been operationalised in calculative terms,
and with what wider consequences? This is indeed an area
where focussed empirical investigation, both quantitative
and qualitative, has the possibility of casting some light
on an issue of current policy signi?cance.
The apparent failure of the audit industry to identify
any of the emerging banking crises and failures is also
resulting in serious embarrassment in the sector. Regard-
less of any more private communications with regulators
and others, in the United Kingdom at least there is now
an explicit but very private acknowledgement of the
problem in the upper reaches of the professional insti-
tutes and a few of the major ?rms. Moreover the latter
are still wondering and worrying if their failures are likely
to result in any costly legal challenges – creating a genu-
ine worry that the Big Four could still become the Big
Three. For that reason the British audit industry is
currently in the midst of intensifying its lobbying of gov-
ernment for legislative changes in the limits on its legal
liability.
0361-3682/$ - see front matter Ó 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aos.2009.07.004
* Tel.: +44 1865 228 472; fax: +44 1865 288 651.
E-mail address: [email protected]
Accounting, Organizations and Society 34 (2009) 797–802
Contents lists available at ScienceDirect
Accounting, Organizations and Society
j our nal homepage: www. el sevi er. com/ l ocat e/ aos
Such developments point to the limited insights we still
have into the actual functioning of auditing and the audit
industry. Now intensely commercialised, the latter has be-
come a dominant lobbyist in nearly every area of account-
ing policy making, often being seen as trying to promote
rules, regulations and standards that facilitate its commer-
cial operation rather than necessarily provide a more
transparent and accurate insight into corporate function-
ing. Sometimes operating individually as audit ?rms but
often collectively through such trade associations as FEE
in Europe and IFAC internationally, such political endeav-
ours are poorly understood and little researched. Even
the resultant proliferation of audit regulatory and standard
setting institutions raises some interesting research ques-
tions as such institution building can sometimes be a
way of de?ecting pressures and calls for more fundamental
change rather than facilitating such change itself. Is that
the case in auditing or not? Moreover even the operation
of the audit craft itself has neither been the subject of seri-
ous description nor a more critical examination. So whilst
major audit ?rms were willing to support and even ?nance
laboratory investigations of the exercising of audit judge-
ment, they rarely have allowed studies of what they actu-
ally do. Research at a distance was acceptable but more
critical inquires into the actual functioning of auditing
was signi?cantly less attractive. It is as if there is a very
strong preference for auditing to remain a mystery – a
seemingly professional mystery rather than a commercial
actuality. Could the present crisis change that? I, at least,
am not optimistic.
The crisis is also encouraging more critical examina-
tions of the managerial innovations that have emerged
from the audit industry, not least its pursuit of the bureau-
cratisation of risk in the name of risk management. Coming
through a crisis where risks have been real and perceived,
increasingly it is coming to be seen that risk management
mechanisms do relatively little to facilitate the real man-
agement of risk. Adding as they do to costs – and the in-
come of the consultancies involved, by isolating rather
than integrating the management of risk, the bureaucratic
mechanisms still promoted by the audit ?rms and their
associates provide yet further evidence of the relatively
limited understanding that the audit industry has of real
time management in action.
Trying to understand the crisis and re?ect on its implica-
tions also illustrates the dangers of the drift away from the
world of accounting practice that has been a characteristic
of so much accounting research for the last fewdecades. In-
deed at times it is possible to think that for some there has
been a drift away from accounting itself: at the very least
there has been a pronounced move towards studying
accounting at a distance. As yet this has not been as severe
in its implications as for those of our colleagues in ?nance
research where increasing numbers have a very limited
appreciation of the complexities of practice and its institu-
tional context. There nevertheless has been a move away
from analysing just such complexities and institutional
contexts in the accounting area, often in the name of theo-
retical elegance and methodological rigour. Interestingly
this is true for both statistically based capital market stud-
ies and a great deal of more critical theorizing. Of course
theoretical and methodological issues are of real impor-
tance, not least in helping to avoid methodological capture
by practice norms, frameworks and ways of looking at the
world. But as numerous other social science disciplines
illustrate, there are ways of balancing interests in the need
for sound and reliable research with genuine interests in
the complexities of practice. It really is important to under-
stand how accounting has become implicated with the cre-
ation of new ?nancial practices, with objectifying and
simplifying the increasingly complex ?nancial transactions
that have emerged from an ever expanding investment in
?nancial engineering. Equally signi?cant is the need for a
more informed understanding of the changes that have oc-
curred in the in?uence structures in the world of account-
ing politics both national and international, of the
changing role that accounting plays in the informational
environment of organizations and with how accounting
changes in relation to shifts in the underlying nature of
the socio-economic system in which business operates.
That latter point suggests a further implication of the
current crisis that could have implications for accounting
inquiry, namely how it illustrates the shifts that have oc-
curred in the western capitalist system, particularly in the
United States and the United Kingdom. While numerous
commentators and analysts had charted the move to a ?-
nance capitalist model, the current crisis has placed partic-
ular attention on the growing in?uence of the banking and
?nancial sector and the enormous growth in ?nancial
transactions internally generated by the activities of that
sector. Not only that, it also has cast a newlight on the rapid
shift of pro?ts to that sector and the wider implications that
this might have had for the distribution of income in soci-
ety. Alongside such realisations we have also observed
the resultant pressures on the audit industry to facilitate
the avoidance of tax payments on and the offshoring of
those very pro?ts. In the United Kingdom where the audit
industry is deeply implicated in the provision of tax advice
and avoidance, there are numerous cases where, on the one
hand, an auditor is approving accounts as true and fair
whilst, on the other hand, helping to make another set dif-
ferent, possibly even ‘untrue’ and ‘unfair’. With so many
?nancial transactions moving from the public domain to
the largely unregulated private sphere of hedge funds and
private equity, the full extent of the impact of the new eco-
nomic landscape on accounting is dif?cult to know. Be that
as it may, I sense that even previously critical researchers
also have been surprised by the sheer extent of the changes
that have been revealed as the crisis developed. Even if the
world of ?nance retreats to a position not dissimilar from
its most recent past, perceptions and understandings of it
are likely to have changed. Or at least they ought to have.
One implication of that shifting awareness ought to be
an increased understanding of the roles that economic cal-
culations play in managing not only the creation of pro?ts
but also their extraction. The more ruthless pursuit of prof-
its should implicate accounting centrally in the changes
that have occurred in both the corporate sphere and its
?nanciers, not least private equity and hedge funds. The
calculation of surplus and its articulation and visibility
throughout the organization and into its ?nanciers seem
to have become ever more signi?cant. A whole host of
798 A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802
?nancial concepts, accounting practices and other calcula-
tive technologies seemingly have become intimately tied
up with what has been the increasingly single minded
attention placed not only on pro?tability itself but also
the transference of those pro?ts, particularly to the ?nan-
cial sector.
Consider the recent example of Alliance Boots in the
United Kingdom. Boots is the largest retail chain in the cos-
metics, health and pharmaceutical sector, having signi?-
cant oligopolistic powers. Taken over by the US private
equity ?rm KKR in conjunction with an Italian entrepre-
neur, the ?rm was so heavily leveraged by its new owners
that it no longer made any pro?ts and thereby avoided
paying any pro?ts tax in the United Kingdom (The Guard-
ian, 2009). But the continuing management of the underly-
ing ?nancial surplus of the once pro?table and tax paying
?rm is already resulting in redundancies, the elimination
of lower price brands, a seeming increase in price levels
and a shift of its headquarters from the UK to the Swiss
tax-haven canton of Zug. Not only that, however. Boots
has now pulled out of the Ethical Trading Initiative
(Mathiason, 2009), allowing it much greater discretion in
managing its supply chain to purely ?nancial ends. All of
these processes result in the movement of pro?ts from
the locales and regions in which they were generated to
those of the ?nanciers who have invested in the ?rm,
potentially to the detriment of the former. In operating
such a business in such ways, accounting is obviously of
extreme importance, enabling the objecti?cation and
quanti?cation of the dominant interest, its diffusion
around the business, and management in the name of it.
Thames Water also provides another example of a Uni-
ted Kingdom company managed in the name of the short
term ?nancial interests of a concentrated ownership
group. Once a nationalised utility, the monopoly is now
owned by the Australian bank Macquarie. The company
now makes record pro?ts but it is still proposing to in-
crease water charges by 17% above in?ation over the next
5 years, with the largest increase of 10.5% coming next
year. Whilst such rate changes are subject to the approval
of the regulator, the company is in a very strong position to
insist on the changes as it can otherwise threaten to radi-
cally reduce its investment programme, much of which is
regarded as important for environmental purposes. Issues
of sustainability, consumer interests and those of the work
force and local communities are all likely to be set aside to
enable the maximum extraction of ?nancial surplus.
A multitude of other examples could be given, particu-
larly in countries with an Anglo-American ?nancial ethos.
However although there is a growing awareness of such
pro?t management and extraction processes, surprisingly
little research has been done into the processes involved,
technical and organizational. Yet some of the calculative
technologies that have helped to operationalise the prior-
ity attached to both pro?t and shareholder value have
emerged from the accounting research community (e.g.,
Rappaport, 1998) and the wider intellectual justi?cation
given to such single minded pursuits has also gained
signi?cantly from highly regarded researchers (for an
overview by one of the most in?uential see Jensen, 2002;
for a history of the development of the concepts involved
see Lazonick & Sullivan, 2000). Such contributions, impor-
tant though they have been for practice, nevertheless orig-
inated at a considerable distance from practice – providing
a further illustration of research at a distance and the pos-
sible extent of its consequences. Although there are some
inquires into the actual functioning of such calculative ap-
proaches to management and their implications for both
the ?rm and society at large (for an early example see Rob-
erts, 1990; also see Froud, Haslam, Johal, & Williams,
2000), so much remains to be known about both the oper-
ation of such ?nancial calculations and their infusion into
the management of such enterprises. Already being called
into question by both eminent practitioners such as Jack
Welch (Guerrera, 2009; The Financial Times, 2009) and
many researchers (see McSweeney, 2008), the current cri-
sis should provide a strong rationale for much more seri-
ous investigation into this important area. Turning that
rationale into research will not be easy however, not least
because of access dif?culties. As with auditing, practitio-
ners are hardly likely to show any enthusiasm for knowing
more about what they do and how they function.
No doubt there are a multitude of other implications
and consequences of the current crisis for accounting.
Faced with such an array of signi?cant effects I decided
to commission a series of short essays from a range of
scholars re?ecting on at least some of the issues that might
be at stake for accounting and accounting research. Not
everyone agreed, so not all aspects of the wider accounting
agenda are addressed. Not all of those that did agree actu-
ally provided a commentary, further adding to the speci?c-
ity of the views that did emerge. Taken together, however,
the essays that follow provide a range of interesting and
challenging observations on the contemporary worlds of
accounting practice and research. The initial brief was for
a short focussed statement. Some authors have kept to that
while others preferred to offer a longer and more devel-
oped insight into their emerging views.
Management accounting and economic crises
One important area of accounting that is not covered is
that of management accounting and the associated areas of
management information and control systems. Yet the cur-
rent economic crisis is putting enormous pressure on the
functioning of management accounting systems in most
organizations in the world. Everyday familiarity with both
business and public organizations suggests that budgets
are being continually set aside and reformulated. There
are more and more pressures for restatements of expecta-
tions: are revenues likely to materialise, are redundancies
inevitable and when and at what level, just what are the
possibilities for radically changing cost levels, and so on.
There has been a growing informational intensity around
not only cash but the concept of liquidity, with the latter
necessitating much deeper understandings of cash
convertibility, asset quality and so on. Strategies are also
being constantly recast, illustrating in the process the
importance of being strategic rather than merely having
a strategy. Ad hoc analyses of a multitude of different as-
pects of the economic functioning of the organization are
A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802 799
becoming a form of standard practice. Management
accounting is moving to operating in continuous time. In
these and many other ways economic information ?ows
are assuming an ever greater salience in the management
of organizational affairs.
Prevalent though such a state of affairs might be, it is
nevertheless one that is poorly represented in the research
literature whether at a descriptive or an analytical level.
Although there have been a number of more general orga-
nizational studies, particularly in times of past crises (see
for example Jick & Murray, 1982; Levine,1978; Nottenburg
& Fedor, 1983; Starbuck & Hedberg, 1977), management
accounting research gives little or no guidance on the
modes of organizational response to economic crises.
Whilst there are literatures on the individual accounting
systems and technologies which sometimes discuss the cir-
cumstances that might facilitate their use, there are few in-
sights into what might be a more holistic organizational
response. Is this a time for a greater informational inten-
sity? How should the con?guration of economic and ?nan-
cial expertise within the organization be mobilised and
changed? Are there uniformpatterns of such developments
or are more contingent factors at work? Do the more suc-
cessful survivors approach the mobilisation of economic
and ?nancial information ?ows in particular ways?
One early inquiry that did address some of these impor-
tant issues was never published although it is mentioned
from time to time in other literatures. Way back in 1975
the Swedes Olofsson and Svalander (1975) probed into
the response of one Swedish organization to an economic
downturn, albeit perhaps one that was not quite as severe
as the present crisis. Nevertheless their ?ndings are still fas-
cinating. Terming the observed response ‘newly poor
behaviour’, Olofsson and Svalander noted that the crisis re-
sulted in an intensi?cation of economic information ?ows
within the organization. Financial information was re-
ported in more detail, more frequently, for more organiza-
tional segments and units, and both systematically and in
an ad hoc manner. The economic and ?nancial aspects of
the functioning of the organization were made more visible
both absolutely and in relative terms. So whilst previously
there might have been competing dimensions of visibility –
operational data, social and human resource information,
marketing intelligence, competitor intelligence and so on,
as a result of the intensi?cation of the internal economic
and ?nancial information, the alternative sources of visibil-
ity became relatively less signi?cant. And therein lay a po-
tential problem. For as Olofsson and Svalander pointed
out, the economic crisis generating the dif?culties for the
organization was external to the organization. Adjustment
to it most certainly required internal economising but it
most likely also required different responses to the shifting
external circumstances. The longer term adjusting, func-
tioning and possibly survival of the organization required
an externally oriented shift instrategy and corporate action,
as well as a process of internal economising. Indeed it is
possible that at the very time that there was an intensi?ca-
tion of the internal economic and ?nancial information
?ows there should have been an even greater development
and intensi?cation of the information entering the organi-
zation from its wider market contexts so that the overall
balance of the information ?ows shifted to the external –
where the real problems reside – at the very time it was
intensifying the internal. In other words, a vibrant organiza-
tion adjusting itself to an economic crisis is likely to be, at
least temporarily, much more information intensive.
Olofsson and Svalander’s observations suggest that an
organization that did not intensify the ?ows of external
information in this way might well get ever more ef?cient,
but ef?cient to the end it could still go to its ?nancial grave
because it had lost touch with its changing and crisis rid-
den environment. Survival and longer term effectiveness
seemingly call for a more holistic informational response
as suggested by the newly poor behaviour hypothesis.
Intriguing though such a hypothesis might be, I am not
aware that either it or the more general observation of the
informational characteristics of organizations in crisis situ-
ations have been the subject of further research inquires.
Not only was the original study seemingly never published,
but other researchers have never been so fascinated by the
more holistic patterns of information response to major
organizational disturbances, crises or otherwise. While
studies have been conducted of particular management
accounting practices and systems, we do not seem to have
developed a more sophisticated understanding of the
cumulative functioning of an array of economic and other
sources of information. It is as if the informational map
of an organization has never been drawn.
The salience of a perspective similar to that of the syn-
drome of newly poor behaviour also emerged many years
ago in a consultancy capacity. A former student knowing
of my interest in understanding the informational charac-
teristics of organizations and their embedding in the wider
socio-political fabric of the organization asked if I would
meet him to discuss a particular problem which his ?rm
was facingwiththedevelopment of its informationsystems.
Although lean and hungry, the company had neverthe-
less survived a particularly deep economic recession that
had driven most of its major competitors into bankruptcy.
The ?rm was now looking not only for ways to re-establish
its markets but also for ways to economise on its existing
operations so that it could generate funds for the renewal
of its market position. One aspect of these changes was a
considerable rationalisation of its information and IT sys-
tems with proposals for these systems to take over other
internal operations that had previously been the province
of different parts of the organization. Hardly surprisingly
strong political opposition had emerged and it was this
that had encouraged the former student to approach me.
He thought that I could help him to solve the political
dilemmas that he was facing. Talking the problem through,
it seemed to me that the changes proposed were predi-
cated on only a very partial insight into the informational
characteristics of the organization. Not only that, but it also
appeared that changes in approach were being proposed
without having any adequate insights into the characteris-
tics of the organization that might have enabled it to sur-
vive when so many of its major competitors had not.
‘Why had you survived?’, I asked. Through good man-
agement was the abbreviated answer I received then and
subsequently from others in the organization. ‘But what
aspects of good management?’, I asked. No one was really
800 A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802
sure: ‘just good management’ my contact and his col-
leagues tended to reply! ‘Why do you ask?’, they inquired.
‘Well’, I said, ‘if you survived and many others didn’t, per-
haps that was a re?ection of your superior knowledge of
both the market and the ways in which it was being af-
fected by the economic downturn’. ‘Oh yes’, they said,
‘we are very good at that’. ‘How?’, I asked. They weren’t
really sure. ‘We just are’, was the repeated response. But
perhaps the questioning had made them less and less sure
for they subsequently agreed to a short study of the infor-
mational characteristics of their ?rm using a mapping
technology that I had developed at that time based on
exploring the information ?ows impacting on major deci-
sions taken by the ?rm.
Presenting the resultant ?ndings to the Board, at an
early stage I was interrupted by an exclamation from one
of the persons present. ‘Good God’, I still remember him
saying. Asked to explain himself, he proceeded to say
how another cost saving strategy under consideration
was the movement of the corporate head of?ce from Lon-
don and the distribution of its staff around a number of
other existing locations. Yet I had demonstrated how a
very signi?cant element of the continuous ?ows of market
intelligence that seemingly had played a key role in the
organization’s ability to adapt and adapt quickly to shifting
market conditions had come from informal ?ows of infor-
mation stimulated by the physical proximity of in?uential
actors and departments. The surprised Board member had
quickly realised that the envisaged physical move of the
head of?ce would have eliminated – or at least seriously
damaged – the very ?ows of information that were now
seen as being so instrumental in their survival and relative
success. The company had indeed been an information
intensive one but it turned out that a great deal of that
intensity was informal and unstructured in nature. Yet
their conception of information was only a formalistic
one, reliant on systems and technologies, the very ones
that they were proposing to extend at the very time they
would have destroyed many of their informal ones.
The understandings of information and its management
in that ?rm changed almost immediately. It was as if even
the managerial practitioners had originally had a more dis-
tanced view of the information ?ows in their own organi-
zation. But their revised view made immediate sense and it
gave them a new insight into at least some of the factors
that had been of real but unrecognized signi?cance in their
survival. Subsequently they did elaborate their formal
information systems and they even rationalised the head
of?ce, but not quite as severely as they had initially pro-
posed. But all these later changes were done on the basis
of a new insight into the informational map of their orga-
nization and the ways in which some aspects of informa-
tion fed into their corporate functioning. A more complex
conception of the organization had emerged.
Yet once again it would appear that relatively little re-
search relates to such a holistic understanding of the infor-
mational aspects of corporate life, least of all in times of
economic crisis. It is, however, an area of immense practi-
cal signi?cance as these examples should serve to testify.
In the early days of Accounting, Organizations and Society
it appeared as though research might move in this direc-
tion. The pioneering contributions of Jay Galbraith were
illustrative of this. In Designing Complex Organizations
(1973) Galbraith provided a framework for understanding
some of the key factors that shape the information inten-
sity of organizations and the variety of ways in which the
demand for information can either be reduced or met.
Based on re?ections on his own experiences in Boeing,
the framework provided a very insightful way of appreciat-
ing how different organizations with different cultures can
and do respond to similar conditions and pressures in very
different ways – something that certainly makes more
standard forms of empirical analysis much more dif?cult.
Galbraith also provided a way of gaining insights into the
informational consequences of organizational changes,
both internal and external. Following the dictates of lean
production, for example, and reducing inventories and
thereby increasing internal patterns of interdependence,
can be shown to increase the demand for internal ?ows
of information in order to manage the interdependency
so created. At about the same time Grinyer and Norburn’s
(1975) inquires into the functioning of planning systems
was one of a number of studies that reinforced the need
for a more holistic approach to the understanding of infor-
mational processes in organizations. Although they found
no signi?cant relationship between formal information
systems and ?nancial performance, they did ?nd that the
use of more informal channels of communication, or infor-
mation processes, were associated with higher ?nancial
performance as were the number of all information pro-
cesses functioning in the organization. Lorsch and Allen
(1973) equally found that the complexity of management
information systems facilitated upward information ?ows,
but not downward ?ows. However both upward and
downward ?ows were found to be associated with favour-
able ?nancial performance, thereby suggesting once again
that alternatives to formal information systems are an
important part of overall organizational functioning.
Other related studies were also undertaken around that
time. It seemed as though a new perspective might be
emergent. At some stage thereafter, however, such ap-
proaches to the wider informational analysis of organiza-
tions seemed to loose appeal. The attention of the
research community shifted to probing into the operation
and consequences of individual management accounting
and information practices in isolation of their wider infor-
mational context, be they new approaches to costing, per-
formance evaluation and management or whatever. I
sense that the emergent approaches were too costly in
terms of time, organizational involvement and the wider
interdisciplinary knowledges that they required. We now
live with the consequences of that, however, knowing rela-
tively little of the overall design and functioning of an orga-
nization’s informational environment. One hopes that that
will change – there are at least a fewsigns that it might (Kil-
foyle, Richardson, & MacDonald, 2008; Porporato, 2008).
Conclusion
Just as in the wider world there is a hope and expecta-
tion that the current economic and ?nancial crisis might
A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802 801
result in a degree of re?ection, learning and real change, so
the following group of articles together constitute the basis
for a similar plea in the area of accounting research. Hope-
fully by more closely observing and re?ecting on both prac-
tice and its context and the changes that have occurred
within them in recent times, the accounting research com-
munity might recognize the advantages of moving beyond
their current focus on research at a distance. While more
abstract conceptions or organizational functioning can be
important, it also needs to be realised that many issues of
real signi?cance and importance can only be investigated
by delving into the complexities of accounting in action.
An improved understanding of accounting and its conse-
quences does require an exploration of the functioning of
accounting institutions, an understanding of the issues at
stake in accounting change, an appreciation of the ever
growing consequences of the commercialisation of the
international audit industry and so on.
Although there are a few signs that at least some
accounting scholars are now recognizing both this need
and its potential, intellectual change is not easy. Being
aware of the constraints of the past and the careerist and
institutional pressures behind them (Hopwood, 2007,
2008), one should not be too optimistic. But the crisis has
been so real and so important that it might – just might –
encourage a few to be more curious and more adventurous
in their intellectual pursuits. Let us hope.
Acknowledgement
I wish to acknowledge the helpful comments of Michael
Power of the London School of Economics and Political
Science.
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802 A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802
doc_661865393.pdf
Introducing a group of essays and articles on the implications of the current economic and
financial crisis for accounting practice and research, this article provides an overview of
some of the principal issues and themes. Noting that very little research has been done
on the management accounting implications of such crises, particular consideration is
given to exploring the significance of and potential for research on this topic. Drawing
on unpublished research and personal experiences, the importance of having a wider
understanding of an organization’s information environment is stressed.
The economic crisis and accounting: Implications for the
research community
Anthony G. Hopwood
*
Saïd Business School, University of Oxford, Park End Street, Oxford OX1 1HP, United Kingdom
a r t i c l e i n f o a b s t r a c t
Introducing a group of essays and articles on the implications of the current economic and
?nancial crisis for accounting practice and research, this article provides an overview of
some of the principal issues and themes. Noting that very little research has been done
on the management accounting implications of such crises, particular consideration is
given to exploring the signi?cance of and potential for research on this topic. Drawing
on unpublished research and personal experiences, the importance of having a wider
understanding of an organization’s information environment is stressed.
Ó 2009 Elsevier Ltd. All rights reserved.
The current economic and ?nancial crisis has signi?cant
implications for accounting, both for practice and for the
research community. In the areas of ?nancial accounting,
auditing, management accounting and the regulatory insti-
tutions that oversee accounting and auditing practices
there are genuine worries that the crisis has revealed
numerous problems and inadequacies. In the academic
and research community it certainly has illuminated issues
that are in need of serious research attention. More than
that, however, the crisis also points to the rather limited
focus of much current accounting research. Too much
intellectual inquiry in the area of accounting seems to
operate within the parameters set by practice rather than
questioning and challenging these, at least from time to
time. Although the implications for research in accounting
may not be so great as that within the ?nance research
community where the serious lack of critical research is
much more visible, a more detailed consideration of the
implications of the crisis for accounting research neverthe-
less points to the need for a more rigorous investment in
diverse research perspectives rather than an unquestioned
following of a singular mainstream view.
So, for example, the move to fair value accounting is al-
ready being hotly debated, embroiling not only national
accounting regulators but also the already increasingly
challenged International Accounting Standards Board.
Whilst one strand of research has most certainly encour-
aged moves in this direction, there is now an emerging
interest in looking at the actual ways in which the changes
were realised. How, in other words, have very abstract con-
ceptual ideas been realised in practice, howhave the inher-
ent ambiguities been operationalised in calculative terms,
and with what wider consequences? This is indeed an area
where focussed empirical investigation, both quantitative
and qualitative, has the possibility of casting some light
on an issue of current policy signi?cance.
The apparent failure of the audit industry to identify
any of the emerging banking crises and failures is also
resulting in serious embarrassment in the sector. Regard-
less of any more private communications with regulators
and others, in the United Kingdom at least there is now
an explicit but very private acknowledgement of the
problem in the upper reaches of the professional insti-
tutes and a few of the major ?rms. Moreover the latter
are still wondering and worrying if their failures are likely
to result in any costly legal challenges – creating a genu-
ine worry that the Big Four could still become the Big
Three. For that reason the British audit industry is
currently in the midst of intensifying its lobbying of gov-
ernment for legislative changes in the limits on its legal
liability.
0361-3682/$ - see front matter Ó 2009 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aos.2009.07.004
* Tel.: +44 1865 228 472; fax: +44 1865 288 651.
E-mail address: [email protected]
Accounting, Organizations and Society 34 (2009) 797–802
Contents lists available at ScienceDirect
Accounting, Organizations and Society
j our nal homepage: www. el sevi er. com/ l ocat e/ aos
Such developments point to the limited insights we still
have into the actual functioning of auditing and the audit
industry. Now intensely commercialised, the latter has be-
come a dominant lobbyist in nearly every area of account-
ing policy making, often being seen as trying to promote
rules, regulations and standards that facilitate its commer-
cial operation rather than necessarily provide a more
transparent and accurate insight into corporate function-
ing. Sometimes operating individually as audit ?rms but
often collectively through such trade associations as FEE
in Europe and IFAC internationally, such political endeav-
ours are poorly understood and little researched. Even
the resultant proliferation of audit regulatory and standard
setting institutions raises some interesting research ques-
tions as such institution building can sometimes be a
way of de?ecting pressures and calls for more fundamental
change rather than facilitating such change itself. Is that
the case in auditing or not? Moreover even the operation
of the audit craft itself has neither been the subject of seri-
ous description nor a more critical examination. So whilst
major audit ?rms were willing to support and even ?nance
laboratory investigations of the exercising of audit judge-
ment, they rarely have allowed studies of what they actu-
ally do. Research at a distance was acceptable but more
critical inquires into the actual functioning of auditing
was signi?cantly less attractive. It is as if there is a very
strong preference for auditing to remain a mystery – a
seemingly professional mystery rather than a commercial
actuality. Could the present crisis change that? I, at least,
am not optimistic.
The crisis is also encouraging more critical examina-
tions of the managerial innovations that have emerged
from the audit industry, not least its pursuit of the bureau-
cratisation of risk in the name of risk management. Coming
through a crisis where risks have been real and perceived,
increasingly it is coming to be seen that risk management
mechanisms do relatively little to facilitate the real man-
agement of risk. Adding as they do to costs – and the in-
come of the consultancies involved, by isolating rather
than integrating the management of risk, the bureaucratic
mechanisms still promoted by the audit ?rms and their
associates provide yet further evidence of the relatively
limited understanding that the audit industry has of real
time management in action.
Trying to understand the crisis and re?ect on its implica-
tions also illustrates the dangers of the drift away from the
world of accounting practice that has been a characteristic
of so much accounting research for the last fewdecades. In-
deed at times it is possible to think that for some there has
been a drift away from accounting itself: at the very least
there has been a pronounced move towards studying
accounting at a distance. As yet this has not been as severe
in its implications as for those of our colleagues in ?nance
research where increasing numbers have a very limited
appreciation of the complexities of practice and its institu-
tional context. There nevertheless has been a move away
from analysing just such complexities and institutional
contexts in the accounting area, often in the name of theo-
retical elegance and methodological rigour. Interestingly
this is true for both statistically based capital market stud-
ies and a great deal of more critical theorizing. Of course
theoretical and methodological issues are of real impor-
tance, not least in helping to avoid methodological capture
by practice norms, frameworks and ways of looking at the
world. But as numerous other social science disciplines
illustrate, there are ways of balancing interests in the need
for sound and reliable research with genuine interests in
the complexities of practice. It really is important to under-
stand how accounting has become implicated with the cre-
ation of new ?nancial practices, with objectifying and
simplifying the increasingly complex ?nancial transactions
that have emerged from an ever expanding investment in
?nancial engineering. Equally signi?cant is the need for a
more informed understanding of the changes that have oc-
curred in the in?uence structures in the world of account-
ing politics both national and international, of the
changing role that accounting plays in the informational
environment of organizations and with how accounting
changes in relation to shifts in the underlying nature of
the socio-economic system in which business operates.
That latter point suggests a further implication of the
current crisis that could have implications for accounting
inquiry, namely how it illustrates the shifts that have oc-
curred in the western capitalist system, particularly in the
United States and the United Kingdom. While numerous
commentators and analysts had charted the move to a ?-
nance capitalist model, the current crisis has placed partic-
ular attention on the growing in?uence of the banking and
?nancial sector and the enormous growth in ?nancial
transactions internally generated by the activities of that
sector. Not only that, it also has cast a newlight on the rapid
shift of pro?ts to that sector and the wider implications that
this might have had for the distribution of income in soci-
ety. Alongside such realisations we have also observed
the resultant pressures on the audit industry to facilitate
the avoidance of tax payments on and the offshoring of
those very pro?ts. In the United Kingdom where the audit
industry is deeply implicated in the provision of tax advice
and avoidance, there are numerous cases where, on the one
hand, an auditor is approving accounts as true and fair
whilst, on the other hand, helping to make another set dif-
ferent, possibly even ‘untrue’ and ‘unfair’. With so many
?nancial transactions moving from the public domain to
the largely unregulated private sphere of hedge funds and
private equity, the full extent of the impact of the new eco-
nomic landscape on accounting is dif?cult to know. Be that
as it may, I sense that even previously critical researchers
also have been surprised by the sheer extent of the changes
that have been revealed as the crisis developed. Even if the
world of ?nance retreats to a position not dissimilar from
its most recent past, perceptions and understandings of it
are likely to have changed. Or at least they ought to have.
One implication of that shifting awareness ought to be
an increased understanding of the roles that economic cal-
culations play in managing not only the creation of pro?ts
but also their extraction. The more ruthless pursuit of prof-
its should implicate accounting centrally in the changes
that have occurred in both the corporate sphere and its
?nanciers, not least private equity and hedge funds. The
calculation of surplus and its articulation and visibility
throughout the organization and into its ?nanciers seem
to have become ever more signi?cant. A whole host of
798 A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802
?nancial concepts, accounting practices and other calcula-
tive technologies seemingly have become intimately tied
up with what has been the increasingly single minded
attention placed not only on pro?tability itself but also
the transference of those pro?ts, particularly to the ?nan-
cial sector.
Consider the recent example of Alliance Boots in the
United Kingdom. Boots is the largest retail chain in the cos-
metics, health and pharmaceutical sector, having signi?-
cant oligopolistic powers. Taken over by the US private
equity ?rm KKR in conjunction with an Italian entrepre-
neur, the ?rm was so heavily leveraged by its new owners
that it no longer made any pro?ts and thereby avoided
paying any pro?ts tax in the United Kingdom (The Guard-
ian, 2009). But the continuing management of the underly-
ing ?nancial surplus of the once pro?table and tax paying
?rm is already resulting in redundancies, the elimination
of lower price brands, a seeming increase in price levels
and a shift of its headquarters from the UK to the Swiss
tax-haven canton of Zug. Not only that, however. Boots
has now pulled out of the Ethical Trading Initiative
(Mathiason, 2009), allowing it much greater discretion in
managing its supply chain to purely ?nancial ends. All of
these processes result in the movement of pro?ts from
the locales and regions in which they were generated to
those of the ?nanciers who have invested in the ?rm,
potentially to the detriment of the former. In operating
such a business in such ways, accounting is obviously of
extreme importance, enabling the objecti?cation and
quanti?cation of the dominant interest, its diffusion
around the business, and management in the name of it.
Thames Water also provides another example of a Uni-
ted Kingdom company managed in the name of the short
term ?nancial interests of a concentrated ownership
group. Once a nationalised utility, the monopoly is now
owned by the Australian bank Macquarie. The company
now makes record pro?ts but it is still proposing to in-
crease water charges by 17% above in?ation over the next
5 years, with the largest increase of 10.5% coming next
year. Whilst such rate changes are subject to the approval
of the regulator, the company is in a very strong position to
insist on the changes as it can otherwise threaten to radi-
cally reduce its investment programme, much of which is
regarded as important for environmental purposes. Issues
of sustainability, consumer interests and those of the work
force and local communities are all likely to be set aside to
enable the maximum extraction of ?nancial surplus.
A multitude of other examples could be given, particu-
larly in countries with an Anglo-American ?nancial ethos.
However although there is a growing awareness of such
pro?t management and extraction processes, surprisingly
little research has been done into the processes involved,
technical and organizational. Yet some of the calculative
technologies that have helped to operationalise the prior-
ity attached to both pro?t and shareholder value have
emerged from the accounting research community (e.g.,
Rappaport, 1998) and the wider intellectual justi?cation
given to such single minded pursuits has also gained
signi?cantly from highly regarded researchers (for an
overview by one of the most in?uential see Jensen, 2002;
for a history of the development of the concepts involved
see Lazonick & Sullivan, 2000). Such contributions, impor-
tant though they have been for practice, nevertheless orig-
inated at a considerable distance from practice – providing
a further illustration of research at a distance and the pos-
sible extent of its consequences. Although there are some
inquires into the actual functioning of such calculative ap-
proaches to management and their implications for both
the ?rm and society at large (for an early example see Rob-
erts, 1990; also see Froud, Haslam, Johal, & Williams,
2000), so much remains to be known about both the oper-
ation of such ?nancial calculations and their infusion into
the management of such enterprises. Already being called
into question by both eminent practitioners such as Jack
Welch (Guerrera, 2009; The Financial Times, 2009) and
many researchers (see McSweeney, 2008), the current cri-
sis should provide a strong rationale for much more seri-
ous investigation into this important area. Turning that
rationale into research will not be easy however, not least
because of access dif?culties. As with auditing, practitio-
ners are hardly likely to show any enthusiasm for knowing
more about what they do and how they function.
No doubt there are a multitude of other implications
and consequences of the current crisis for accounting.
Faced with such an array of signi?cant effects I decided
to commission a series of short essays from a range of
scholars re?ecting on at least some of the issues that might
be at stake for accounting and accounting research. Not
everyone agreed, so not all aspects of the wider accounting
agenda are addressed. Not all of those that did agree actu-
ally provided a commentary, further adding to the speci?c-
ity of the views that did emerge. Taken together, however,
the essays that follow provide a range of interesting and
challenging observations on the contemporary worlds of
accounting practice and research. The initial brief was for
a short focussed statement. Some authors have kept to that
while others preferred to offer a longer and more devel-
oped insight into their emerging views.
Management accounting and economic crises
One important area of accounting that is not covered is
that of management accounting and the associated areas of
management information and control systems. Yet the cur-
rent economic crisis is putting enormous pressure on the
functioning of management accounting systems in most
organizations in the world. Everyday familiarity with both
business and public organizations suggests that budgets
are being continually set aside and reformulated. There
are more and more pressures for restatements of expecta-
tions: are revenues likely to materialise, are redundancies
inevitable and when and at what level, just what are the
possibilities for radically changing cost levels, and so on.
There has been a growing informational intensity around
not only cash but the concept of liquidity, with the latter
necessitating much deeper understandings of cash
convertibility, asset quality and so on. Strategies are also
being constantly recast, illustrating in the process the
importance of being strategic rather than merely having
a strategy. Ad hoc analyses of a multitude of different as-
pects of the economic functioning of the organization are
A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802 799
becoming a form of standard practice. Management
accounting is moving to operating in continuous time. In
these and many other ways economic information ?ows
are assuming an ever greater salience in the management
of organizational affairs.
Prevalent though such a state of affairs might be, it is
nevertheless one that is poorly represented in the research
literature whether at a descriptive or an analytical level.
Although there have been a number of more general orga-
nizational studies, particularly in times of past crises (see
for example Jick & Murray, 1982; Levine,1978; Nottenburg
& Fedor, 1983; Starbuck & Hedberg, 1977), management
accounting research gives little or no guidance on the
modes of organizational response to economic crises.
Whilst there are literatures on the individual accounting
systems and technologies which sometimes discuss the cir-
cumstances that might facilitate their use, there are few in-
sights into what might be a more holistic organizational
response. Is this a time for a greater informational inten-
sity? How should the con?guration of economic and ?nan-
cial expertise within the organization be mobilised and
changed? Are there uniformpatterns of such developments
or are more contingent factors at work? Do the more suc-
cessful survivors approach the mobilisation of economic
and ?nancial information ?ows in particular ways?
One early inquiry that did address some of these impor-
tant issues was never published although it is mentioned
from time to time in other literatures. Way back in 1975
the Swedes Olofsson and Svalander (1975) probed into
the response of one Swedish organization to an economic
downturn, albeit perhaps one that was not quite as severe
as the present crisis. Nevertheless their ?ndings are still fas-
cinating. Terming the observed response ‘newly poor
behaviour’, Olofsson and Svalander noted that the crisis re-
sulted in an intensi?cation of economic information ?ows
within the organization. Financial information was re-
ported in more detail, more frequently, for more organiza-
tional segments and units, and both systematically and in
an ad hoc manner. The economic and ?nancial aspects of
the functioning of the organization were made more visible
both absolutely and in relative terms. So whilst previously
there might have been competing dimensions of visibility –
operational data, social and human resource information,
marketing intelligence, competitor intelligence and so on,
as a result of the intensi?cation of the internal economic
and ?nancial information, the alternative sources of visibil-
ity became relatively less signi?cant. And therein lay a po-
tential problem. For as Olofsson and Svalander pointed
out, the economic crisis generating the dif?culties for the
organization was external to the organization. Adjustment
to it most certainly required internal economising but it
most likely also required different responses to the shifting
external circumstances. The longer term adjusting, func-
tioning and possibly survival of the organization required
an externally oriented shift instrategy and corporate action,
as well as a process of internal economising. Indeed it is
possible that at the very time that there was an intensi?ca-
tion of the internal economic and ?nancial information
?ows there should have been an even greater development
and intensi?cation of the information entering the organi-
zation from its wider market contexts so that the overall
balance of the information ?ows shifted to the external –
where the real problems reside – at the very time it was
intensifying the internal. In other words, a vibrant organiza-
tion adjusting itself to an economic crisis is likely to be, at
least temporarily, much more information intensive.
Olofsson and Svalander’s observations suggest that an
organization that did not intensify the ?ows of external
information in this way might well get ever more ef?cient,
but ef?cient to the end it could still go to its ?nancial grave
because it had lost touch with its changing and crisis rid-
den environment. Survival and longer term effectiveness
seemingly call for a more holistic informational response
as suggested by the newly poor behaviour hypothesis.
Intriguing though such a hypothesis might be, I am not
aware that either it or the more general observation of the
informational characteristics of organizations in crisis situ-
ations have been the subject of further research inquires.
Not only was the original study seemingly never published,
but other researchers have never been so fascinated by the
more holistic patterns of information response to major
organizational disturbances, crises or otherwise. While
studies have been conducted of particular management
accounting practices and systems, we do not seem to have
developed a more sophisticated understanding of the
cumulative functioning of an array of economic and other
sources of information. It is as if the informational map
of an organization has never been drawn.
The salience of a perspective similar to that of the syn-
drome of newly poor behaviour also emerged many years
ago in a consultancy capacity. A former student knowing
of my interest in understanding the informational charac-
teristics of organizations and their embedding in the wider
socio-political fabric of the organization asked if I would
meet him to discuss a particular problem which his ?rm
was facingwiththedevelopment of its informationsystems.
Although lean and hungry, the company had neverthe-
less survived a particularly deep economic recession that
had driven most of its major competitors into bankruptcy.
The ?rm was now looking not only for ways to re-establish
its markets but also for ways to economise on its existing
operations so that it could generate funds for the renewal
of its market position. One aspect of these changes was a
considerable rationalisation of its information and IT sys-
tems with proposals for these systems to take over other
internal operations that had previously been the province
of different parts of the organization. Hardly surprisingly
strong political opposition had emerged and it was this
that had encouraged the former student to approach me.
He thought that I could help him to solve the political
dilemmas that he was facing. Talking the problem through,
it seemed to me that the changes proposed were predi-
cated on only a very partial insight into the informational
characteristics of the organization. Not only that, but it also
appeared that changes in approach were being proposed
without having any adequate insights into the characteris-
tics of the organization that might have enabled it to sur-
vive when so many of its major competitors had not.
‘Why had you survived?’, I asked. Through good man-
agement was the abbreviated answer I received then and
subsequently from others in the organization. ‘But what
aspects of good management?’, I asked. No one was really
800 A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802
sure: ‘just good management’ my contact and his col-
leagues tended to reply! ‘Why do you ask?’, they inquired.
‘Well’, I said, ‘if you survived and many others didn’t, per-
haps that was a re?ection of your superior knowledge of
both the market and the ways in which it was being af-
fected by the economic downturn’. ‘Oh yes’, they said,
‘we are very good at that’. ‘How?’, I asked. They weren’t
really sure. ‘We just are’, was the repeated response. But
perhaps the questioning had made them less and less sure
for they subsequently agreed to a short study of the infor-
mational characteristics of their ?rm using a mapping
technology that I had developed at that time based on
exploring the information ?ows impacting on major deci-
sions taken by the ?rm.
Presenting the resultant ?ndings to the Board, at an
early stage I was interrupted by an exclamation from one
of the persons present. ‘Good God’, I still remember him
saying. Asked to explain himself, he proceeded to say
how another cost saving strategy under consideration
was the movement of the corporate head of?ce from Lon-
don and the distribution of its staff around a number of
other existing locations. Yet I had demonstrated how a
very signi?cant element of the continuous ?ows of market
intelligence that seemingly had played a key role in the
organization’s ability to adapt and adapt quickly to shifting
market conditions had come from informal ?ows of infor-
mation stimulated by the physical proximity of in?uential
actors and departments. The surprised Board member had
quickly realised that the envisaged physical move of the
head of?ce would have eliminated – or at least seriously
damaged – the very ?ows of information that were now
seen as being so instrumental in their survival and relative
success. The company had indeed been an information
intensive one but it turned out that a great deal of that
intensity was informal and unstructured in nature. Yet
their conception of information was only a formalistic
one, reliant on systems and technologies, the very ones
that they were proposing to extend at the very time they
would have destroyed many of their informal ones.
The understandings of information and its management
in that ?rm changed almost immediately. It was as if even
the managerial practitioners had originally had a more dis-
tanced view of the information ?ows in their own organi-
zation. But their revised view made immediate sense and it
gave them a new insight into at least some of the factors
that had been of real but unrecognized signi?cance in their
survival. Subsequently they did elaborate their formal
information systems and they even rationalised the head
of?ce, but not quite as severely as they had initially pro-
posed. But all these later changes were done on the basis
of a new insight into the informational map of their orga-
nization and the ways in which some aspects of informa-
tion fed into their corporate functioning. A more complex
conception of the organization had emerged.
Yet once again it would appear that relatively little re-
search relates to such a holistic understanding of the infor-
mational aspects of corporate life, least of all in times of
economic crisis. It is, however, an area of immense practi-
cal signi?cance as these examples should serve to testify.
In the early days of Accounting, Organizations and Society
it appeared as though research might move in this direc-
tion. The pioneering contributions of Jay Galbraith were
illustrative of this. In Designing Complex Organizations
(1973) Galbraith provided a framework for understanding
some of the key factors that shape the information inten-
sity of organizations and the variety of ways in which the
demand for information can either be reduced or met.
Based on re?ections on his own experiences in Boeing,
the framework provided a very insightful way of appreciat-
ing how different organizations with different cultures can
and do respond to similar conditions and pressures in very
different ways – something that certainly makes more
standard forms of empirical analysis much more dif?cult.
Galbraith also provided a way of gaining insights into the
informational consequences of organizational changes,
both internal and external. Following the dictates of lean
production, for example, and reducing inventories and
thereby increasing internal patterns of interdependence,
can be shown to increase the demand for internal ?ows
of information in order to manage the interdependency
so created. At about the same time Grinyer and Norburn’s
(1975) inquires into the functioning of planning systems
was one of a number of studies that reinforced the need
for a more holistic approach to the understanding of infor-
mational processes in organizations. Although they found
no signi?cant relationship between formal information
systems and ?nancial performance, they did ?nd that the
use of more informal channels of communication, or infor-
mation processes, were associated with higher ?nancial
performance as were the number of all information pro-
cesses functioning in the organization. Lorsch and Allen
(1973) equally found that the complexity of management
information systems facilitated upward information ?ows,
but not downward ?ows. However both upward and
downward ?ows were found to be associated with favour-
able ?nancial performance, thereby suggesting once again
that alternatives to formal information systems are an
important part of overall organizational functioning.
Other related studies were also undertaken around that
time. It seemed as though a new perspective might be
emergent. At some stage thereafter, however, such ap-
proaches to the wider informational analysis of organiza-
tions seemed to loose appeal. The attention of the
research community shifted to probing into the operation
and consequences of individual management accounting
and information practices in isolation of their wider infor-
mational context, be they new approaches to costing, per-
formance evaluation and management or whatever. I
sense that the emergent approaches were too costly in
terms of time, organizational involvement and the wider
interdisciplinary knowledges that they required. We now
live with the consequences of that, however, knowing rela-
tively little of the overall design and functioning of an orga-
nization’s informational environment. One hopes that that
will change – there are at least a fewsigns that it might (Kil-
foyle, Richardson, & MacDonald, 2008; Porporato, 2008).
Conclusion
Just as in the wider world there is a hope and expecta-
tion that the current economic and ?nancial crisis might
A.G. Hopwood/ Accounting, Organizations and Society 34 (2009) 797–802 801
result in a degree of re?ection, learning and real change, so
the following group of articles together constitute the basis
for a similar plea in the area of accounting research. Hope-
fully by more closely observing and re?ecting on both prac-
tice and its context and the changes that have occurred
within them in recent times, the accounting research com-
munity might recognize the advantages of moving beyond
their current focus on research at a distance. While more
abstract conceptions or organizational functioning can be
important, it also needs to be realised that many issues of
real signi?cance and importance can only be investigated
by delving into the complexities of accounting in action.
An improved understanding of accounting and its conse-
quences does require an exploration of the functioning of
accounting institutions, an understanding of the issues at
stake in accounting change, an appreciation of the ever
growing consequences of the commercialisation of the
international audit industry and so on.
Although there are a few signs that at least some
accounting scholars are now recognizing both this need
and its potential, intellectual change is not easy. Being
aware of the constraints of the past and the careerist and
institutional pressures behind them (Hopwood, 2007,
2008), one should not be too optimistic. But the crisis has
been so real and so important that it might – just might –
encourage a few to be more curious and more adventurous
in their intellectual pursuits. Let us hope.
Acknowledgement
I wish to acknowledge the helpful comments of Michael
Power of the London School of Economics and Political
Science.
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