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IFRS in a Global World pp 131–140Cite as

The Accounting Representation of the Enterprise Entity: An Historical Perspective

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Abstract

Accounting scholars, standards-setters and preparers have been confronted with a new financial reporting paradigm that has displaced the traditional focus on accountability of the enterprise entity to its stakeholders (including shareholders) and on the general interest. This focus was common to both static and dynamic accounting approaches in continental Europe, as well as to both proprietary and entity accounting perspectives in North America. This chapter develops three conceptual and practical lessons driven from a comparative analysis of traditional and modern accounting paradigms: (i) the enterprise entity should be distinguished from its markets of reference; (ii) fair value and discounting do not belong to accounting; and (iii) accounting should not follow the market, but the market pricing process may take advantage from an accounting lighthouse. Illustrative examples are then taken from the international financial reporting standards concerning intangibles, goodwill and financial liabilities. According to this analysis, the market-based view on accounting is flawed and undermines accounting suitable connection with law and economics of the business firm as an enterprise entity.

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Acknowledgments

Yuri Biondi is research director and executive committee member of the Financial Regulation Research Lab (Labex ReFi), ESCP Europe, 79 avenue de la Republique, Paris 75011, France (http://www.labex-refi.com/). A previous version of this chapter was read at and included in the proceedings of the ‘Second Symposium on Accounting Research’ organised by the Autorité des Normes Comptables (ANC), Paris, 16 December 2011. The current version further draws upon our “Accounting and Business Economics: Understanding the Past to Face the Present and Prepare the Future”, published as chapter 18 (pages 485–492) in Y. Biondi, S. Zambon et al. (2012), Accounting and Business Economics: Insights From National Traditions, London and New York: Routledge.

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  1. Cnrs – ESCP Europe, Paris, France

    Yuri Biondi

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  1. Yuri Biondi
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Correspondence to Yuri Biondi .

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Editors and Affiliations

  1. Paris-Dauphine University, Paris cedex 16, France

    Didier Bensadon

  2. Paris-Sud University, Sceaux, France

    Nicolas Praquin

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Biondi, Y. (2016). The Accounting Representation of the Enterprise Entity: An Historical Perspective. In: Bensadon, D., Praquin, N. (eds) IFRS in a Global World. Springer, Cham. https://doi.org/10.1007/978-3-319-28225-1_10

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