Disciplining building societies by accounting-based regulation, circa 1960

Bernardo Batiz-Lazo and Masayoshi Noguchi

The British Accounting Review, 2014, vol. 46, issue 1, 1-17

Abstract: Taking as its point of departure the rules regulating accounting practice, this article focuses on the use of accounting numbers and ratios to regulate the specific behaviour of reporting entities. In particular, the corporatist analysis provides a framework for exploring the use of accounting-based regulation to discipline those depository financial institutions that depart from industry norms. Empirical support built upon the legislation enacted in 1959 and 1960 which set performance parameters for building societies and gave the Chief Registrar of Friendly Societies new powers of intervention. These powers and parameters were used together with accounting ratios (which were generally recognised as financially sound within the industry) to discipline building societies. Although only a tiny fraction of the societies were ultimately sanctioned, they all acknowledged important deviations from specified accounting-based criteria. In some cases accounting-based criteria were effective in driving societies to dissolution, while others, which avoided immediate dissolution were forced to improve their governance and systems of internal control. Intervention was further activated under the interdependent relationship formed between the Registrar of Friendly Societies and the Building Societies Association. Together they successfully lobbied state authorities to discipline societies outside the industry association. As a result, the evidence documented in this paper sheds light on the dynamics upon which accounting-based regulation came to be constructed and implemented.

Keywords: Accounting-based regulation; House Purchase and Housing Act, 1959; Building Societies Act, 1960; Chief Registrar of Friendly Societies; The Building Societies Association; Corporatism (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0890838913000553
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:46:y:2014:i:1:p:1-17

DOI: 10.1016/j.bar.2013.07.002

Access Statistics for this article

The British Accounting Review is currently edited by Nathan Lael Joseph and Alan Lowe

More articles in The British Accounting Review from Elsevier
Bibliographic data for series maintained by Catherine Liu ().