Financialized Accounting: Capitalization and leveraging the intangible

Colin Haslam and Nick Tsitsianis

No 58, Working Papers from Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research

Abstract: This paper is about the financialization of international accounting standards by the International Accounting Standards Board (IASB). International Financial Reporting Standards (IFRS’s) now incorporate fair value reporting for different types of corporate assets. Thus the interminable process of speculative recapitalization and financial volatility associated with asset trading in secondary capital markets is absorbed into the fabric of corporate financial statements. This change in the reporting process, within the financial statements, creates new forms of risk. First, the process of double entry bookkeeping transmits disturbance between line items that may or may not have an equivalent capacity to absorb these financial adjustments. Second, asset valuations in current time are very sensitive to changes in assumptions about future cash flow, risk and cost of capital. The IASB’s financialization of accounting has the potential to generate dysfunctional economic and social outcomes because accounting line items are increasingly wired into capital market conditions and valuation modelling.

Keywords: Financialization; International Accounting Standards; Mark to Market Accounting; Risk. (search for similar items in EconPapers)
JEL-codes: F3 G32 (search for similar items in EconPapers)
Date: 2015-05
New Economics Papers: this item is included in nep-acc
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Persistent link: https://EconPapers.repec.org/RePEc:cgs:wpaper:58

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