Popular Accounting History: Evidence from Post-Enron Stories

By Carnegie, Garry D.; Napier, Christopher J. | Accounting Historians Journal, December 2013 | Go to article overview

Popular Accounting History: Evidence from Post-Enron Stories


Carnegie, Garry D., Napier, Christopher J., Accounting Historians Journal


Abstract: This study reviews the concept of "popular history" in the context of accounting history, drawing on evidence from post-Enron stories about corporate collapse and accounting and auditing failure. The study complements the work of Carnegie and Napier [2010], which focused on how professional accountants and their firms and organizations were portrayed in books about Enron and Arthur Andersen that were published during the period 2002 to 2005. These books can be characterized as "popular histories", and the present paper illustrates how the scholarly work of academic accounting historians is given little attention by the authors of these post-Enron stories. It points to the largely untapped potential for accounting historians to make their research findings and insights available for a general readership.

INTRODUCTION

The reputation of the international accounting profession suffered badly from the dramatic collapse of Enron in 2001, accompanied by financial and accounting scandals involving companies such as WorldCom in the United States of America (USA), HIH in Australia and Equitable Life Assurance Society in the United Kingdom (UK). This collapse in the profession's reputation was exemplified by the demise of Arthur Andersen, previously one of the "Big Five" international accounting firms, in 2002. The impact of the Enron collapse on stereotypical views of accountants and accounting was studied by Carnegie and Napier [2010], who focused on the ways in which professional accountants, firms and organizations were portrayed in the large number of books on the collapse of Enron and other major corporations published in the period 2002-2005. That study identified three themes for which the post-Enron literature provided insights: how accountants were represented as characters, whether authors considered accounting to be a profession or more like an industry, and the extent to which the Enron affair provided evidence that accountants were no longer honest and trustworthy.

Carnegie and Napier [2010, p. 370] observed that some of the authors whose work they analyzed had used historical material and arguments. They identified authors' use of a contrast between "then" and "now" (with possible overtones of nostalgia for a "golden age" of professional probity), as well as the employment of a narrative trope "old sins cast long shadows", where authors suggested that the failure of Andersen in particular was rooted in that firm's early embrace of consulting as an extension of its audit practice. The use of historical arguments in studies written for a general readership is interesting in that authors, who are typically not accountants, appear to believe that their readership will find such arguments cogent rather than irrelevant. This suggests that there is a general concern with history on the part of the readers of popular management narratives, which may provide opportunities for historians of accounting to communicate their knowledge to broader audiences.

In this study, we examine the use of accounting history in post-Enron stories, and use this as the basis for considering references to accounting in popular history more generally. We explore how commentators have drawn on the history of accounting to portray accountants and their work and to contrast the personalities of "founding fathers" of the US accounting profession with their early 21st-century successors. Our investigation starts from the books about Enron and Arthur Andersen that were published during the period 2002 to 2005 (see Carnegie and Napier [2010, p. 367] for a list of the 28 books examined), although only 12 of these books refer to accounting or auditing from a historical perspective. We seek an enhanced understanding of how accounting history is drawn upon in commenting on the corporate and professional failures themselves and on their implications, for example for the future of the accounting profession. We begin with a brief discussion of the concepts of "public history" and "popular history", and then outline the collapse of Enron and the demise of Arthur Andersen. …

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