An Historical Examination of the Evolving Environment of Regulated Financial Disclosure in Britain since 1844: With Special Reference to the Pre-Eminence of the Income Statement in Business Affairs

Abstract

This historical study traces the environment of regulated financial disclosure in Britain since the mid-nineteenth century. In particular, it attempts to trace the evolutionary or developmental nature of accounting measurement and external disclosure as these relate to the evolving structure of political and social organisation in Britain. The relationship between the development of political and social structures and the growth in importance of accounting functions and audited financial disclosure is displayed with respect to the significance of the income statement. Philosophical and cultural controversies and challenges are generated under the balance sheet emphasis which stresses valuation concepts for capital maintenance and decision-relevance on the one hand; and under the income statement emphasis which stresses verification of transactions and distributions of funds given welfare priorities on the other. Preeminence of the income statement in business affairs generally and in accounting disclosure in particular is identified and analysed.