Operationism as the Basis of Accounting Income Constructs: A Philosophical and Empirical Investigation Including A Market Association Test of Replacement Cost and Implicit Interest Accounting
Bublitz, Bruce Orval
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https://hdl.handle.net/2142/71363
Description
Title
Operationism as the Basis of Accounting Income Constructs: A Philosophical and Empirical Investigation Including A Market Association Test of Replacement Cost and Implicit Interest Accounting
Author(s)
Bublitz, Bruce Orval
Issue Date
1982
Department of Study
Accountancy
Discipline
Accountancy
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Business Administration, Accounting
Abstract
In recent years, criticisms have been made of accounting income constructs especially by researchers associated with empirical methodologies and with market constructs. The overall objective of the thesis is to respond to these criticisms by developing an "environmental model" in which accounting income serves a purpose in a market context. Development of an income model based on market constructs facilitates the use of empirical methodologies also based on the same market constructs for testing implications of the income framework. Accounting models based on the philosophy of operationism are chosen as the basis for the thesis. A history of the philosophy indicates that operationism can be considered the heir to modern empiricism and pragmatism in accounting-based scientific thought.
A review of economic history reveals that an operational overtone can be given to market related constructs and is reflected in the works of such great economists as Marshall and Fisher. An operational income model can be developed based on the construct of market prices as a very significant social institution. The emergence of a description from the market environment is a merger of operationism with coordination of activities in a decentralized market system; this merger effectively combines accounting operationalism with an economics derived market perspective.
Data are unavailable for many obvious tests of implications of the theory, but an operational, market based model of accounting income can be used to justify a current price (cost) of utilizing service resource (capital). Traditional issues of imputed interest and current cost measures are adopted based on such a justification. Current cost data from SEC 10-K reports are collected for four years. The market reaction to this and other more traditional measures is compared. Generally, traditional historical cost income is found to be most associated with market changes although a measure based on implicit interest outperforms it in one yearly test. While some evidence exists that implicit interest based on the current cost of assets has some information content, the income measures based solely on the SEC replacement cost data are generally less associated with the market responses than the historical cost measures.
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