The Italian economia aziendale and chambers’ CoCoA

Francesco Capalbo and Frank Clarke

Abacus, 2006, vol. 42, issue 1, 66-86

Abstract: At first glance the Italian accounting tradition of Economia Aziendale and Chambers’ system of Continuously Contemporary Accounting (CoCoA) appear extreme opposites. The ex ante financial calculation of distributable income drawing on the net present values of the aggregative net assets in the former, and in the latter a system of accounting for an all‐inclusive income with the separable assets measured in terms of their current cash equivalents, appear irreconcilable, unlikely bedfellows. But the International Financial Reporting Standards present a system using separable and aggregative assets’ fair values and calculations of their net present values in assessing asset impairment. Whether Economia Aziendale and CoCoA are indeed so opposed deserves renewed examination. Anglo‐American accounting, of which expositions of CoCoA are part, is said to lack a business economics tradition of the kind said to justify Economia Aziendale. This stands in stark contrast with European traditions manifested in the Dutch Bedrijfseconomie, the German Betriebswirtschaft, and the Italian Economia Aziendale. This article seeks to understand that absence by contrasting—the Economia Aziendale framework and accounting theory developed in the Anglo‐American tradition. The primary elements of space and time coordination—the lynchpins of the pure theory of the azienda (the core of Economia Aziendale)—are generally regarded as missing in the Anglo‐American tradition. But the original construction of Economia Aziendale leads to the generalization that any attempt to determine a firm's value or to measure and analyse its performance during its lifetime would result in an unacceptable interruption of the space and time coordination, and yield unreliable results. Curiously, the analysis here exposes an unexpected complementarity of Chambers’ CoCoA and some postulates of the pure theory of Economia Aziendale. The theory that has been only partially acceptable to the Anglo‐American profession (namely its use of market [fair] values) emerges as highly compatible with the most theoretically extreme in the Italian tradition.

Date: 2006
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