Published Accounts, Stewardship, and Decision Making: A Case Study 1863–1940

Abstract

The conventional wisdom is that (i) the published accounts of British registered companies fulfilled a narrow stewardship role from inception (1844) through to 1947 when the Companies Act added significantly to statutory disclosure requirements, and (ii) the ‘decision useful’ role of published financial reports is the creation of ‘golden age’ accounting thinkers in the 1950s and 1960s. Our paper challenges this version of the history of stewardship and decision usefulness based on an in-depth study of the archives of the Staveley Coal and Iron Co. Ltd for the period 1863–1940. In so doing, the idea that stewardship and decision usefulness served as competing objectives of financial reporting is rejected as a false dichotomy. Our findings are consistent with Bryer's (1993) proposition that modern financial reporting developed in the late-nineteenth century to provide useful information for purposes of investor decision making. Further, we find that financial reporting practices were based on a conceptual framework within which prudence (or conservatism) served as a fundamental accounting principle.