Anglo-American accounting and finance: good for business? bad for society?

1. Anglo-American accounting and finance: good for business? bad for society? David Collison

2. Socialism (central planning) Capitalism (market economy) Descriptions of “isms” tend to be polarised: Which can obscure an important distinction “Anglo-American” or “Stock market” Capitalism “Social Market” or “Welfare” Capitalism

3. Characteristics “Anglo-American” Capitalism “Social Market” Capitalism” Maximising shareholder value Balancing interests of various stakeholders Make a profit Maximise profit And there are differences in their accounting traditions …..

4. In a recent report from a UK accounting body, perceptions of accounting cultures were described as follows: in the UK and US …. “a preference for professionalism, flexibility, optimism and transparency…” In Continental Europe …. “preferences for secrecy, uniformity and statutory control.” in other words …

5. Bob's.ppt http://www.geocities.com/bkip20002/index.html Graphics by Bob http://home.att.net/~kip20002/ Anglo-American accounting! Continental European accounting

6. The same report argued: for re-education; and that politicians should – “agree to give up their sovereignty over accounting standards in favour of an international but essentially private sector body”

7. International Accounting Standardisation/Harmonisation 1973 – formation of the International Accounting Standards Committee latterly it was explicitly linked with the “Anglo American” accounting countries in the “G4 + 1” G4 Australia & New Zealand Canada UK & Ireland USA 2001 - a new International Standards Board formed

8. The media repeatedly spreads the message that the Anglo-American socio-economic culture is best Western European countries are “overburdened by social securitycommitments … shareholder value cannot be released as aggressively …as in the US” (Financial Times) An FT feature described Japan’s "cherished socialcontract" as no longer viable and called for "a more flexible labour market“ FT editorials prescribed for Japan “the discipline of modern management and accounting” and noted “social barriers” to “widespread restructuring” “the success of US and UK capital markets encourages the desire to emulate them” (UK accounting body)

9. We decided to investigate some non-financial indicators of social well-being: In particular, the Under Five Child Mortality Rate in the 24 richest countries in the OECD

10. The source of our data

11. Countries Ranked by Child Mortality Rate 2001-4 (deaths per 1000 live births up to the age of five) Sweden 3.25 Iceland 3.75 The Top Six Norway 4.00 Denmark 4.25 Japan 4.50 Finland 4.75

12. The Middle Twelve Austria 5.00 Spain 5.25 Germany 5.00 Belgium 5.50 Greece 5.00 France 5.50 Italy 5.25 Netherlands 5.50 Korea 5.25 Portugal 5.50 Luxembourg 5.25 Switzerland 5.50

13. Australia 6.00 The Bottom Six Ireland 6.00 New Zealand 6.00 Canada 6.50 UK 6.50 USA 8.00

14. Key Result – Very strong association (0.1% significant) between child mortality and and income inequality

15. Changes in Rankings of the Bottom Six Countries 2001-4 1990 1960 Australia 19th Equal 15th Equal 5th Ireland 19th Equal 15th Equal 15th New Zealand 19th Equal 21st Equal 7th Canada 22nd Equal 5th 12th UK 22nd Equal 15th Equal 8th Equal USA 24th 23rd 11th

16. By Richard Wilkinson By Richard Layard

17. So why should the Anglo-American business culture be held up as an example to follow? "the clamour and sophistry of merchants and manufacturers easily persuade ... that the private interest of a part, and of a subordinate part of the society is the general interest of the whole” Adam Smith