�T）Followings are the comments to the presentation in Japan by Professor S. Sunder, “Classical, Stewardship, And Market Perspectives On Accounting: A Synthesis”:

Resume for Sunder Sensei 1995/6/9

1. Main materials for fictitious capital and for the development of several forms of organizations

R. Hilferding, Das FinanzKapital, 1910 (Part 2: theory of joint-stock corporation)

K. Marx, Das Kapital, 1894 (Vol.3, Ch.25: credit and fictitious capital)

W. Sombart, Der Moderne Kapitalisumus, 1922.

　H. Ohtuka, Theory of Historical Development of Joint Stock Corporation, 1938 (in Japanese)

Accounting literature on fictitious capital: a few even in Japan (see point 4)

2. Schema of movement of capital: for understanding of real and fictitious capital movement

Pm

G−W　　 …P…W‘−G’ , G− W− G’ �@real capital movement

�A A �Afictitious capital movement

　　�@(production) (distribution)

　　　G‘

3. Some significance of fictitious capital for our concern

(i)Fictitious capital has its own movement outside of real capital movement.

(ii)From (i), fictitious capital has only market price, not value.

(iii) Joint-stock corporation does not exist in the first place without fictitious capital.

4. Accounting problems on fictitious capital :some references

Capital Accounting problem (credit side problem of B/S)

controversies over stock premium (goodwill) in 1950‘s in Japan

Asset Accounting problems (debit side problem of B/S)

controversies over accounting valuation of securities today in Japan as well as in other ountries.

5. My concerns

“(historical) cost vs. (current) value” controversies: the contrast

Inflation Accounting in 1970‘s ← assets valuation problems on real capital

accounting valuation of securities today ← assets valuation problems on fictitious capital

the view of essential difference of capital → the difference of assets Is security W(goods)?

6. Main points of Prof. Tumori’s presentation and resume

1) the importance of historical view: (accounting) problem with historical peculiarity

→ the view of “boundary line” is important.

2) relationship between economics and accounting: understructure and superstructure

historical development of real and fictitious capital, and credit system: “boundary line”

3) economics and accounting disclosure: development of fictitious capital and accounting publicity

fictitious capital →socialization of ownership→shift to publicity or disclosure from reporting

4) economics and accounting measurement: differentiation of income calculation

before (ex. commenda) and after the emergency of joint stock corporation

publicity or disclosure＞measurement → dividendable income ＞corporate income

split of real and fictitious capital, estrangement between production and credit

→ impact on accounting measurement (ex. accounting problem on Financial Instruments)

＊my question: why does the credit of fictitious capital bring about the predominance of disclosure

7. Theory of Organization vs. Theory of Capital: the contrast

(i) three organizational forms defined by two boundaries → three perspectives on accounting

“concentration and centralization of capital” defines “the boundary lines”: historical development

of capital ( …, usurer’s capital, commercial capital, industrial capital, finance capital, …)　 　

　　→ organization forms → perspectives on accounting

＊ Boundary line on industrial capital is important for accounting.

(ii) the point of view of heterogeneity: common and difference

Prof. Sunder’s report might lay emphasis on common and synthesis. ←organization theory

Prof. Tumori’s report may lay emphasis on transformation and differentiation. ←capital theory

(iii) organization is an arena of capital, by capital, and for capital.

8. Overview of other presenters: for the theme “Economics and Accounting”

(i) Group I: market-oriented, in the sense, neoclassical economic perspective

Prof. Goto’s: positive test on the usefulness of accounting information in the market of

fictitious capital

Prof. Nakano’s: introducing the new factor (social activities) using game theory , the model and

its positive test is market-oriented as Prof. Goto’s

(ii) Group II: not market-oriented, contract or agency theory perspective and positive test as Group I

Prof. Suda’s: hypothesis and test on informative perspective choice of accounting procedures

Prof. Okabe’s: hypothesis and test on the relationship of dividend policy to accounting choice

＊common perspective on accounting: facilitating trust-making function of accounting information

(iii) Group III: not positive research, but dynamic or historical point of view on accounting

perspectives based on economic theory

Prof. Sunder’s: based on the economic theory of organization

Prof. Tumori’s: based on the economic theory of capital

(iv) Super theory: to be a base of Group I, II, and III

Prof. Ijiri’s: the importance of understanding comparing with explanation, prediction, and action

＊possibility and importance of economics we choose for perspectives on accounting

�U) Comments to your presentation and paper,“Classical, Stewardship, And Market Perspectives On Accounting: A Synthesis”:

By Junji Ishikawa, 7 June, 1995

Comparing with Professor Tumori’s presentation, I was very much interested in the clear contrast of two kinds of economics, the economic theory of organization you chose and the economic theory of capital Prof. Tumori chose, and how the difference of these economics reflects the difference of the perspectives on accounting. That is my principal concern in brief. Now, followings are my short comments:

1)The historical development of fictious capital (Tumori’s resume p.8) corresponds to “the second boundary line” in your paper p.4. The economic theory of capital explains the essence of fictious capital, and intrinsic reason of its emergency. But, how about the economic theory of organization ? Does and how it explain the ground of the second line?

2)Based on the theory of capital, there may be another boundary line before “the first line”(separation of ownership and control) and after “the second line”(subdivision of ownership into a large number of small pieces). If the different view on the boundary line relates on the perspective on accounting, the economics we choose comes out to be very important.

3)Comment 1 and 2 are concerned with economics itself. The concern for accounting is how the difference of the economic theory reflects the difference the perspectives on accounting. For Prof. Tumori’s resume (at p.8), the enlargement of fictious capital have great impact on the perspective on accounting reflected by real capital development; that is the shift from recording/measurement oriented accounting to reporting/disclosure oriented accounting. How about the economics and its reflection on accounting (the perspectives on accounting) you chose? There may be overlap in some places, but there must be important difference in other places; that is my great concern.

4)I am a little bit surprised that a professor at Carnegie-Mellon University is concerned with a historical study of accounting, and at the same time I would be glad to know that you have same interest as I have: dynamic and historical view of accounting perspectives. Here in Japan, we have great predecessors of researchers on accounting history or dynamic theory of accounting based on economics; one of the representatives is Wasaburo Kimura Prof. Ijiri mentioned in his presentation and the paper (Accounting Review, 1980) comparing with Paton and Littleton.

5) Lastly, we have a lot of literatures which you would have great interest, especially comparing with your accounting perspectives based on the economics you chose, but unfortunately you cannot read Japanese. What a shame! In short, what kinds of economics would give us a deep understanding (Prof. Ijiri’s term) of accounting? This is my concern and may be what I want to mention here.

(transcribed from the letter to Prof. Sunder on 7 June, 1995)