Ted O'Leary

Accounting and the construction of the governable person

Abstract The concern of the paper is historical. It addresses one familiar event within the literature of the history of accounting—the construction of theories of standard costing and budgeting in the first three decades of the twentieth century. A different interpretation of this event is offered from that commonly found. This is seen to have significant implications for the relevance of historical investigation to the understanding of contemporary accounting practices. Instead of an interpretation of standard costing and budgeting as one stage in the advance in accuracy and refinement of accounting concepts and techniques, it is viewed as an important calculative practice which is part of a much wider modern apparatus of power which emerges conspicuously in the early years of this century. The concern of this form of power is seen to be the construction of the individual person as a more manageable and efficient entity. This argument is explored through an examination of the connections of standard costing and budgeting with scientific management and industrial psychology. These knowledges are then related to others which, more or less simultaneously, were emerging beyond the confines of the firm to address questions of the efficiency and manageability of the individual. The more general aim of the paper is to suggest some elements of a theoretical understanding of accounting which would locate it in its interrelation with other projects for the social and organisational management of individual lives.

Accounting, “economic citizenship” and the spatial reordering of manufacture☆

Abstract This paper addresses the roles of accounting within one of the most extensive programs of advanced manufacture undertaken by an American corporation. Three distinct levels of analysis are pursued: firstly, the profound alterations that were to be effected in the identity and mode of operation of a key assembly plant, and in the ordering of its manufacturing spaces, as diverse calculative and managerial expertises were brought into complex and tentative alignments within a factory modernization process; secondly, the hopes and ideals for advanced manufacture and for American competitiveness that were to be constituted and made operable within this process; and thirdly, the links formed between this ambitious program of plant renewal and the various appeals to a “new economic citizenship” that have become prevalent in debates on advanced manufacture. By focusing on the relays and interconnections between these three levels of analysis, and the shifting ensembles thus formed, we are able to explore the dynamics of a specific attempt to govern the economic and personal dimensions of an enterprise. The concern is with all of those programs and technologies, including accounting, which seek to act upon and to transform the conduct of manufacture and the conduct of persons in a certain way. For it is, we argue, through such interventions that a new mode of seeking to govern economic life is set in place. And it is through such means that a novel type of economic citizen is called upon to play a new set of roles within the enterprise and within the nation.

Accounting expertise and the politics of the product: Economic citizenship and modes of corporate governance☆

Abstract The “rediscovery of the factory” has been one of the key events in American political and economic debates of the past decade. This paper addresses the complex of arguments, claims and strategies that have centered on the factory and manufacturing processes in American industry. These it terms the “politics of the product”. Accounting expertise, defined as a changing set of legitimated claims to competence, is fundamentally implicated in the politics of the product. For accounting expertise has been identified as an important part of the problem, rather than the solution. But the politics of the product is more than a set of claims and arguments. It also involves attempts to change the ways in which production processes are represented and acted upon. Three dimensions are identified: problematizations, programmes and technologies. Current attempts to reform the calculative technologies of accounting, through such mechanisms as activity based costing, are seen to be more than technical devices for better representing new manufacturing systems. Rather, they are considered to be an integral component of a significant shift in modes of corporate governance. Attempts to transform accountancy are held be intrinsically linked to attempts to foster a new form of economic citizenship. Changes in accounting expertise are thus seen to be centrally implicated in transformations in the government of economic life.

Making accountancy practical

Abstract Accountancy is generally assumed to have a practical function. This function is that of guiding decisions within firms towards the end of economic efficiency. Even when this function is considered to have been lost, it is by reference to such a notion that calls for reform are made (Johnson, H. T. & Kaplan, R. S., Relevance Lost (Boston: Harvard Business School Press, 1987)). This paper questions the self-evidence of this category, arguing that the notion of acountancys practical function is the end point of complex processes of conceptual invention, rather than an a priori grounding. The paper argues that these processes are neglected in recent influential studies of accounting innovation, and examines how certain key concepts that enable accountancys practical function to be represented as unproblematic are “made up”. These processes of conceptual invention are argued to be an important and neglected aspect of accounting innovation. To illustrate this thesis the paper addresses one set of concepts formed during the 1930s in the U.S. that was of decisive importance in elaborating the notion of accountancys “practical” function. Particular rhetorical devices drawn from political culture and articulated in the administrative literature of the period made it possible for accountancys practical function to be represented as one clearly differentiated from political and moral objectives. Two aspects of “making accountancy practical” are identified: firstly “making up the cooperation” as a democratic and contractual entity; secondly, “making up the individual” as a person endowed with the ability to make decisions and assume responsibility, and representing leadership as an essential executive function.

Capital Budgeting Practices and Complementarity Relations in the Transition to Modern Manufacture: A Field Based Analysis

This paper provides a descriptive and qualitative study of how capital budgeting practices at Caterpillar Inc. were redesigned to accommodate a shift from mass production technologies to modern manufacturing systems. We describe how the firms capital budgeting practices shifted from considering incremental asset purchase proposals to considering proposals to purchase sets of diverse but mutually reinforcing assets (investment bundles). We draw on Milgrom and Roberts (1990, 1995) argument that investment in modern manufacture will be value-maximizing only if firms coordinate their capital spending across diverse but mutually reinforcing types of assets to economize on Edgeworth complementarities. Our description of the shift in Caterpillars capital budgeting practices illustrates how one firm produced an operational model of complementarity relations.

Observations on corporate financial reporting in the name of politics

Abstract The paper argues a need to redraw the boundaries between politics, and academic and professional work in the corporate financial reporting field. The argument is pressed on grounds of intellectual honesty, in view of the under-determination by facts that can characterise social scientific theories, including accounting theories, that seek to legitimate or to change practice. An altered understanding of intellectual honesty is required of scholars and practitioners, one which seeks to maximise public awareness of the inherently disputable and questionable in the truth-claims of practices acting upon their welfares.

Rethinking the Factory: Caterpillar Inc.

Analyses of government have had little to say about the management of people within the modern corporation. This paper seeks to remedy this neglect by examining the transformation of the principles and practices for governing the factory which occurred in the USA across the last two decades of the twentieth century. This transformation included changes to the technology and physical layout of factories, changes to the concepts according to which manufacturing is organized, and changes in the public discourse concerning work and the worker. The reshaping of identities for workers and managers, and the construction of new ideas of economic citizenship, represented new ways of governing economic life. “Rethinking the factory” meant both a physical reconstruction of the factory, as well as a reconstruction of ideas and practices about how to govern the actions of persons within the reengineered customer-driven factory.

How Analysts Process Information: Technical and Financial Disclosures in the Microprocessor Industry

Abstract Following Bradshaw (‘Analyst information processing, financial regulation, and academic research’ [2009], and Analysts forecasts: What do we know after decades of work? [2011]), this paper examines how analysts process information, particularly in an information environment characterised by multiple and potentially complementary information sources. The setting is the microprocessor industry, one in which technical information is particularly significant and complex to digest. Based on 3837 analyst earnings-forecast revisions, issued by 134 analysts, we examine quantitatively the speed, magnitude, and information content of the reactions of individual analysts and subgroups of analysts to both periodic and timely technical disclosures, and as a complement to periodic financial disclosure. We find that analysts are much slower to react to timely technical disclosures than they are to periodic financial disclosures. We find also that technical and financial disclosures complement each other. Furthermore, we find that there is a ‘hierarchy’ of analysts in this particular industry, as evidenced through the strength of reaction to timely technical disclosures. Finally, we find that lower speed in reacting to timely technical disclosures and a higher intensity in the use of timely technical disclosure (in conjunction with periodic financial disclosure) result in greater accuracy, and that more experienced analysts tend to be less accurate. We suggest that the findings may have implications for other industries such as Bio-Tech Pharma.