Twentieth century accounting research in the German language area

Abstract

This paper consists of two parts. Part I, dealing with the first half of the twentieth century, begins with some introductory words on the pre-eminence of German accounting research during the first half of the twentieth century, and offers a survey of the most important theories of accounts classes that prevailed during the first two decades or longer. Following World War I, the issue of hyperinflation in Austria and Germany stimulated a considerable amount of original accounting research. Afterwards, a series of competing Bilanztheorien (accounting or balance sheet theories), discussed in the text, dominated the scene. Separate sections or sub-sections are devoted to charts and master-charts of accounts in German accounting theory, as well as to cost accounting and the writing of accounting history. Part II offers a survey of the second half of the twentieth century (occasionally with comparisons to research in the English language literature). Dynamic accounting, developed during the first half of the twentieth century, became the basis of a pagatoric (cash-based) accounting theory. In the 1970s and early 1980s relatively little attention was paid to inflation accounting, apart from research in capital maintenance. Accounting theories shifted towards the present value approach, and empirical studies began in the early 1960s and gathered momentum in the last two decades of the century. German accounting legislation was strongly influenced by the dominance of codified law, and by the standardization attempts within the European Economic Community. Consolidated statement presentation and auditing research also became prominent, while cost and managerial accounting continued to be major research areas. Competing costing approaches dominated the field, often based on production theoretical concepts. Marginal costing (occasionally together with mathematical programming) was further developed and a closer connection between cost accounting and investment theory was established. The introduction of information theory (and the closely related agency theory) into the German literature greatly influenced recent German accounting research. Historical research was, in contrast to the first half of the century, of minor importance.

Keywords:

• Germany
• Switzerland
• Austria
• accounting research
• twentieth century

Acknowledgements

Financial support for this paper from the Social Sciences and Humanities Research Council of Canada is gratefully acknowledged, as far as the contribution by R. Mattessich is concerned. Some parts of this paper, relating to the first half of the twentieth century, were presented at the Congress of the European Accounting Association 2003, in Seville, and reproduced (in Mattessich & Küpper, 2003) under the title ‘Accounting research in the German language area – first half of the 20th century’, Review of Accounting and Finance, 2 (3, 2003). We gratefully acknowledge permission of its editor, Prof. Ahmed Riahi-Belkaoui, for publishing any overlapping material. Further thanks go to the editor of this Special Issue of ABFH, and to two anonymous referees for valuable suggestions.

Notes

1. One of the referees of this paper suggested that we should distinguish between ‘leadership in thought and leadership in practice’. There can be little doubt that during much of the nineteenth century, Great Britain led in accounting practice, above all in auditing. Yet this paper neither focuses on the nineteenth century nor on accounting practice; it concentrates on accounting research. And there seems to be little disagreement about the international influence and recognition of German accounting theory during the first half of the twentieth century (see the last section of Part I). We also believe that the international significance of the various German Bilanz theories is well accepted and that, during the first three or four decades of the twentieth century, these theories were unrivalled in subtlety and richness of thought as far as problems of valuation, realization, classification, allocation, stewardship, and so on, were concerned.

2. Other names are Gomberg, Sganzini, Schär, Calmes, Käfer and Scherer (all originally or permanently teaching in Switzerland); furthermore, Nicklisch, Rieger, Prion, Osbahr, Passow, Walb, Kalveram, Lion, le Coutre, Geldmacher, Lehmann, Isaac, Mellerowicz, Seffert, Beste, Gutenberg, Seischab, Kosiol, and Münstermann.

3. However, in the particular context of the English translation of Schmalenbach's magnum opus, the title might not quite reflect Schmalenbach's intention of imposing a dynamic function on a basically ‘static’ balance sheet at the cost of the income statement (for details see subsequent sections).

4. In the French accounting literature Batardon (1911) also submitted a proposal for a chart of accounts. Also the Société Académique de Comptabilité Belgique seems to have made similar efforts in the early years of the new century (Gomberg, 1912).

5. Depending on the preference of its promoter – five was a ‘magic number’ for account classes, derived from Degranges' famous synoptic system (cf. Mattessich, 2003: p. 127).

6. This is originally a French name, spelled ‘Calmès’. Hence the author's French publications use this spelling (cf. Degos & Mattessich, 2003; Mattessich, 2003).

7. For details about the dangers of such confusion, see Mattessich (1995: pp. 43–51).

8. Although Sykora (1949: pp. 91–93) treated Seidel's theory separately.

9. In some respects the expression ‘dynamic accounting’ (emphasizing, above all, relevant income determination instead of asset and equity representation) is a better translation of ‘dynamische Bilanz’ than is ‘dynamic Balance Sheet’ – above all, the latter is a linguistic contradiction.

10. Specifically Passow (1910), Fäs (1913), Geldmacher (1920, 1923), von Kast (1920), Klein (1920), Prion (1919, 1921, 1922), Schmalenbach (1921, 1922a, 1922b, 1925), Schmidt (1921, 1922a, 1922b, 1923a, 1923b, 1924, 1926, 1927a, 1927b, 1927c, 1929, etc.), Mahlberg (1920, 1921, 1923, 1925), Walb (1921), Kalveram (1922), Isaac (1924), Leitner (1923, 1924), Dörfel (1925, for Austria), and Haar (1925).

11. Including Bayard, Delavelle, Fain, Faure, Léger, Raffegeau and Lacout, as well as Thomas.

12. Nicklisch is not even profiled in Chatfield and Vangermeersch (1996).

13. Cf. the authors' index of the encyclopaedic work by Küpper and Wagenhofer (2002: cols 2226, 2230, 2232, 2239), where Schmidt has over 12 entries, Walb seven, Rieger three and, almost incredibly, Nicklisch and Schär each have only two. Compare this with the first edition of the same work (ed. by Kosiol, 1970b), where Schmidt has 48 entries, Walb 42, Rieger 36, Nicklisch 20, and Schär 11. This may indicate an increasing anti-historical outlook of the individual contributors, and of the present generation of accounting academics in general. But such an attitude is not confined to Germany. In America, for example, Zeff recently raised the following complaint:

A few years ago, I made an informal sampling of how many of the leading doctoral programmes had even a single course that would acquaint students with the literature before the 1970s. I found virtually none. When I would ask, ‘Why?’ I would receive the answer, ‘We don't have enough time. We use the time we have to explain current research paradigms and methodological approaches’. I think we need to work toward a better balance …

(comments by Zeff, contained in Dietrich et al., 2002: p. 74)

14. Schoenfeld, for example, said about Schmalenbach's theory: ‘The major emphasis for income and performance measurement, consequently, had to be placed on the income statement’. However, he correctly stated that ‘his balance sheet measured assets at various intermediate stages of this conversion [from cash to resources into cash again]; it represents a record of unconsumed resources, or, in his words different classes of accruals or prepayments’ (Schoenfeld, 1996b: p. 515).

15. For a mathematical comparison of different inflation adjustment models (with nominal vs. real, realized vs. unrealized, and monetary vs. non-monetary capital gains) see Mattessich (1995: pp. 97–119).

16. For publications about the dynamische Bilanz, see De Motte Green (1937) and Forrester (1987), both in English; and Nicklisch (1921a, 1932), Lion (1928a), Lehmann (1932), Rieger (1936), Münstermann (1957, 1966), Muscheid (1957), von Kori (1968a, 1968b), Seicht (1970b), and Kruk et al. (1984), in German.

17. While Kosiol's pagatoric theory had its origin in the late 1930s, it had its major impact after World War II, and thus will be discussed in Part II of this paper.

18. For discussions of or critical views on Schmidt's work, see Rieger (1930), Hasenack (1933a), Isaac (1950), Schwantag (1951), Voigtländer (1952), Whittington (1983), Tweedie and Whittington (1984), Mattessich (1986), Clarke and Dean (1986, 1989, 1990).

19. And in the English literature by MacNeil, and much later by Chambers, Sterling, and others.

20. Instead of Betriebswirtschaftslehre, he spoke of Privatwirtschaftlehre, thus emphasizing the ‘private’ (i.e. the profit and business) character of his endeavour.

21. For further details on Rieger's valuation approach, see Jores (1928), Hintner (1930), Engel (1965), and Gümbel (1966) – and for a general examination of the valuation structure for balance sheet presentation, see Gutenberg (1926).

22. Indeed, the profit and loss account is a relative latecomer:

	The profit and loss account was rarely known in German ledgers of the sixteenth century, not even the theoreticians used it. The entry of profits and losses directly in to the owner's equity account was originally the custom; only later did one use the indirect transfer, namely through a profit and loss account, and from there into the equity account.
	(Penndorf, 1933a: p. 137, translation)

23. For example Jung, Fredersdorff, Ballewski, Tolkmitt (see Dorn, 1976; Mattessich, 2003).

24. See, for example, Calmes (1906, 1920, 1922), (Schmalenbach 1908–1909, 1919b, 1924, 1948), Schuchart (1909), Meyerberg (1913), Preiser (1919), Isaac (1921), Lehmann (1921, 1925, 1928), Beste (1924, 1930), Großmann (1925a, 1925b), Heina (1925), Lohmann (1929), Kosiol (1927, 1944c), Nicklisch (1929–1932, Nicklisch (1929), Bouffier (1932), Hasenack (1930, 1933b), Reichskuratorium für Wirtschaftlichkeit (1939, RKW), Mellerowicz (1933), Seidel (1933), Beisel (1936), Funk (1937), Fischer et al. (1939), the economist Erich Schneider (1939, 1940, 1951), Michel (1941), Boßhardt (1948), Schnutenhaus (1948), Schwantag (1949), Wolter (1948), Illetschko (1950) and Kalveram (1951). There was even a German report on Sowjet cost accounting by Rosenkranz (1949).

25. In 1949 the American Goetz made similar proposals, independent of Schmalenbach (ibid.).

26. This contained, apart from some of his own contributions (e.g. Meithner, 1933b), articles by Austrian scholars (like Hatheyer, 1933; Kerschagl, 1933; Mayer, 1933; Nusko, 1933; Seidel, 1933), accompanied by a galaxy of those from Germany and Switzerland (as, for example, Haar, 1926; Gutenberg, 1933; Pape, 1933; Penndorf, 1933a; Schranz, 1933; Seischab, 1933; Thoms, 1933; Töndury, 1933).

27. For a review of Kosiol's theory, see Gutenberg (1949).

28. For a possible exception to this view, see the ‘master thesis’ by Schüppenhauer (1965).

29. For a comparison of the similarities and differences between these two crucial works of accounting theory, see Mattessich (1986).

30. For details see survey articles by Coenenberg et al. (1978), Coenenberg et al. (1984), Franzen (1985), Coenenberg and Haller (1993b), Küpper (1993a), and Möller and Hüfner (2002).

31. For a more detailed discussion of the issues examined in this section, see Eierle (2005), in this volume.

32. As to the situation in Switzerland, see Dellmann (1994).

33. In Germany the formulation of ‘accounting principles’ can be found as early as 1897 when the Handelsgesetzbuch (commercial code) promulgated the Grundsätze ordnungsmäßiger Buchführung (principles of orderly accounting).

34. Slaymaker (1996) traced the influence of individual authors (and their publications) on the creation of the FASB's Conceptual Framework (see also Zeff, 1982).

35. For a slightly dated comparison between accounting rules and practices in the USA and Germany, see Ballwieser (1996).

36. Or, as Christensen and Demski (2003: p. 4) state: ‘The value school, then, views the task as one of reasonably well approximating value, of designing a financial measurement system that will measure value. The information content school, by contrast, views the financial measures as measures of information events, not of value. What is being measured, then, differs in a most fundamental sense for the two approaches’.

37. A still more sophisticated text of the information economics approach, that by Christensen and Feltham (2003, 2005), does not even contain any references to the issue of standard setting (or such institutions as the FASB) in its Subject Index.

38. As Volume 4 of his comprehensive work on business and microeconomics.

39. The accounting encyclopaedias of the Schäffer–Poeschel Verlag (formerly C. E. Poeschel Verlag) presently consist of two tomes: first, the Handwörterbuch der Rechnungslegung und Prüfung, edited by Ballwieser, Coenenberg and von Wysocki (2002); and second, the Handwörterbuch Unternehmensrechnung und Controlling, edited by Küpper and Wagenhofer (2002). The latter is the fourth (completely revised edition) of Kosiol's (1970b) Handwörterbuch des Rechnungswesens (its second edition appeared in 1981, edited by Kosiol, Chmielewicz and Schweitzer, and its third edition in 1993, edited by Chmielewicz and Schweitzer). Other encyclopaedias of this series deal each with one of the following subjects: business economics, organization, marketing, banking and finance, planning, government administration, export and international business, and finally, German business management. It is a series unmatched in the English business literature.

40. Their closest counterpart in America is The History of Accounting: An International Encyclopedia (Chatfield & Vangermeersch, 1996), which is however more historically oriented, less massive, organized in a looser form, and often less intimidating. Sometimes it contains personal profiles, and a single author may have several contributions.