How the balance sheet misrepresents shareholder claims and undermines the entity perspective

Carol M. Graham and Todd L. Sayre

International Journal of Critical Accounting, 2018, vol. 10, issue 3/4, 193-205

Abstract: While the revised conceptual framework issued by the FASB and the IASB states that an entity perspective is appropriate for financial reporting, the framework nevertheless still contains elements that are inconsistent with this perspective. This paper aims to contribute to the discourse around financial reporting perspective by examining the shareholder-centric focus inherent in the traditional balance sheet. We argue that the current balance sheet configuration presents a potentially misleading characterisation of shareholder claims. We suggest that shareholders do not own the corporation, its undistributed profit or the underlying assets.

Keywords: shareholder claims; balance sheet; legal ownership; critical accounting. (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijcrac:v:10:y:2018:i:3/4:p:193-205

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