Paul J. Miranti

Associationalism, Statism, and Professional Regulation: Public Accountants and the Reform of the Financial Markets, 1896-1940

In this article Projessor Miranti contrasts the differing reactions of leaders in the public accounting profession to the structure of national economic regulation that emerged in America during the first decades of the twentieth century. Specifically, he focuses on the actions taken by two national professional organizations, the American Association of Public Accountants and its successor, the American Institute of Accountants, at two important junctures in the history of financial reform: the establishment of the Federal Reserve Board and the Federal Trade Commission and the organization of the Securities and Exchange Commission. In assessing these experiences, his article concentrates on identifying the changing circumstances and political contexts that gave rise first to an associationalist response and then to a statist response to the problem of ordering the nations financial markets.

The development of actuarial-based pension accounting at the Bell System, 1913—40

This article evaluates the process of firm-specific learning relating to the development of actuarially based pension accounting at the Bell System in the USA from 1913 to 1940. Drawing on Alfred D. Chandlers notion of an “integrated learning base”, it analyzes the steps taken by the firm in learning how to order the multiple forms of specialized knowledge necessary for effective pension liability management. The study also explains how this change moderated relationships between such stakeholder groups as employees, investors, regulators, professional advisors and tax authorities. The pension plan was a key economic benefit that sought to increase employee retention and morale through the promise of retirement compensation for diligent, long-term service. It also sought to address humanely the economic problems of old age in a rising urban-industrial society, which had scant resources dedicated to social welfare. Although originally a pay-as-you-go system, the escalating costs associated with a rapidly expanding workforce forced its abandonment in favor of an actuarially based system in 1927. The article analyzes this evolution in management practice through the New Deal era and the emergence of a national social security system in 1935.

Integrating accounting and statistics: Forecasting, budgeting and production planning at the American Telephone and Telegraph Company during the 1920s

Abstract Drawing on the scholarly perspectives of James R. Beniger and Alfred D. Chandler, we examine a long‐term process of firm‐specific learning at the American Telephone and Telegraph Company (AT&T). Extensive archival records reveal the firms efforts to improve its informational resources for market planning, capital budgeting and production scheduling in the 1920s. These initiatives were meant to minimise the likelihood of a repetition of the financial crisis that nearly drove AT&T into bankruptcy in 1906–07. The informational innovation was costly as it required specialised human capital, the identification of suitable metrics corresponding to underlying business processes and the integration of these metrics within the elements of a complex firm. Such a transformation developed more reliable forecasting of future demand for telecommunication services. Central to this process was the adaptation of new econometric methodologies for predicting business cycle fluctuations and the integration of these findings into operational plans. Reforms of this sort helped to quantify risk and reduce internal asymmetries that threatened to undermine the smooth, integrative management of AT&Ts corporate headquarters unit, its regional operating subsidiaries and Western Electric, its captive manufacturing arm. Our study contributes to a deeper understanding of the historical evolution of management accounting by studying firm‐specific learning to combat external uncertainties and internal information asymmetries in the coordination and control of a giant business enterprise.

Corporate Learning and Traffic Management at the Bell System, 1900–1929: Probability Theory and the Evolution of Organizational Capabilities

This study analyzes the evolution of organizational capabilities for assessing market growth and capital budgeting in the traffic management operations of the Bell System from 1900 to 1929. The initial impetus for developing the complex procedures that were integrated into this process was the need to enhance firm competitiveness, particularly in response to the threats to its survival during the financial panic of 1907. The resultant new organizational capabilities, however, also eventually proved vital in successfully guiding the firms planning for system automation and in demonstrating compliance with regulatory mandates for efficient and economical service. Moreover, this study explains how probability theory became a key element in this managerial transition, thus, providing the Bell System with a powerful analytical tool useful for confronting uncertainty in budgeting and business planning.

Corporate Learning and Quality Control at the Bell System, 1877-1929

From 1877 to 1929 the Bell System extended its qualityassurance capabilities, a step that was critical to the companys ability to certify the reliability of its equipment and apparatus and to provide economical service. Learning in this context involved the gradual development of an organizational structure for coordinating and controlling quality-assurance activities at both the staff and line levels and between the corporate elements of the Bell System. Over the course of the initiative, innovative methods of analysis emerged that provided useful new insights into the manufacturing process. The companys adaptation of probability theory, for example, enabled it to launch a comprehensive inspection regime, which became known as “statistical quality control” (SQC). Based on this new approach, Bell succeeded in broadening its manufacturing knowledge, quantifying definitions of quality, reducing costs and risk, thus assuming the more reliable operation of its vast telephone network. Eventually this upgrading of learning led to the formation of a new profession of quality engineering, which found adherents across many industries in the United States and abroad.

Graph standardization and management accounting at AT&T during the 1920s

Drawing principally on archival resources, this study examines the standardization of graphical representations of managerial accounting information at the American Telephone and Telegraph Company (AT&T) during the 1920s. This innovation in management practice promoted operational efficiency by reducing the uncertainty associated with internal informational asymmetries that frequently arise in enterprises of great scale, scope and complexity. This change also invigorated management accounting and reduced risk perceptions by providing clearer delineation of important trends and relationships in a dynamic business environment. The innovative practices extended the vision of top management and, thus, strengthened their ability to coordinate and control the enterprise’s business activities. This new form of organizational learning was also adaptive, drawing on well established approaches followed in the firm’s extensive range of scientific and engineering endeavors. It shaped corporate culture in important ways by establishing norms for the accumulation, analysis and application of firm-specific economic information.

The emergence of accounting as a global profession – an introduction

The articles in this volume deal with the globalization of professional accountancy since the midnineteenth century. This dimension of modernity responded to the growing need for information brought about by vast socioeconomic change. In business the exploitation first of coal and petroleum-based energy resources and later the creation of information-based technologies induced the evolution of improved economic measurement capabilities that exceeded those of the bookkeeping legacy inherited from the medieval past. Because of its tractability and high degree of abstraction, accounting became a critical medium for informing the mind’ eye about the varied activities of organizations of great scale, scope and complexity in business, government and other collective endeavors. These properties also facilitated the establishment of flexible quantitative constructs for coordinating the activities of the many interdependent groups that modern society had come to increasingly rely on to assure smooth functioning.

Organizational evolution at Lybrand, Ross Bros. and Montgomery in the twentieth century

This article examines the evolution of practice strategy and organizational structure at the US accounting firm Lybrand, Ross Bros. & Montgomery from its inception in 1898 through to its merger with Price Waterhouse in 1998. We focus on the interaction between the firm and its broader economic, social and political contexts as we analyze key drivers of organizational change. The accounting enterprise developed a dual strategy involving both horizontal integration and service diversification for adapting successfully to changes in markets, professional knowledge, technology and regulation. Organizational learning was fundamental to its successful evolution in scale and scope as it enabled the firm to develop strategies and structures that responded effectively to changing external challenges and opportunities.

Chandler's Paths of Learning

In his last two major works, Inventing the Electronic Century and Shaping the Industrial Century , Alfred Chandler extended his well-known historical model put forth originally in Strategy and Structure, The Visible Hand , and Scale and Scope by drawing on insights from scholarship dealing with organizational learning and evolutionary economics. In the earlier works, he won high praise, as evinced by the awarding of the Bancroft and Pulitzer prizes for his contribution in advancing the understanding of history, economics, and sociology. His work presented a powerful alternative vision of businesspeople from the version usually communicated by the older Progressive school of history. Although practitioners of the latter brand of history generally acknowledged industrializations material benefits, many worried that such change represented a Faustian bargain: they feared that concentrated economic power threatened the preservation of cherished democratic institutions and values.

The Enlightenment’s connections to two US accounting-based regulatory models

Enlightenment ideals relating to individual and group autonomy versus state power have long shaped socioeconomic ordering in the Western world. This article explores how competing Enlightenment ideologies influenced the development of two different accounting-based regulatory models in the United States, the Interstate Commerce Commission (ICC) and the Securities and Exchange Commission (SEC). Both commissions experimented with both models with different outcomes. The ICC, formed in 1887, ultimately followed a Hamiltonian approach involving direct intervention of the federal government to regulate the monopoly power of railroads. Almost half of a century later, after the 1929 Crash, the SEC was formed to re-establish public confidence in the nation’s financial markets. That resulted in reducing investors’ risk perceptions by assuring greater transactional transparency and probity. The SEC settled upon a Jeffersonian approach, which supported the delegation of responsibility for the application of accounting knowledge in regulation to professional groups rather than government officials. This approach characterized the emergent bureaucracy of the United States’ fast-expanding national executive state.