The Accounting Historians Journal Vol. 18, No. 1 June 1991
Ian C. Stewart SEATTLE PACIFIC UNIVERSITY
THE ETHICS OF DISCLOSURE IN COMPANY FINANCIAL REPORTING IN THE UNITED KINGDOM 1925-1970
Abstract: Ethics is understood as the worthiness of the rights and needs for accounting information of contending groups in society. Company law is viewed as a means by which users of financial state-ments rights and needs have been redressed, and which users have relatively less important claims for information. The moral idealism of a true and fair view is being converted into impersonal disclosure laws which serve to provide, in the main, for the needs of sharehold-ers.
The theme of this paper is the role of mandatory public disclosure rules in removing the superior information of the issuers of financial statements (accounters). Specifically, com-pany law is viewed as a means by which the users of financial statements (accountees') rights to know have been redressed.1 A diverse and expanded set of accountees are now pressing their rights to know. Today the list includes shareholders, creditors,
The author acknowledges the contribution made to the research by the Honorary Visiting Scholar Program at Regent College and the facilities provided by the College, in Vancouver, B.C., Canada, where he spent his sabbatical leave in 1989. The author also thanks his former university, the University of Auckland for granting the sabbatical.
1Lev [January, 1988] argues that inequity in capital markets leads to adverse transaction costs, thin markets, low liquidity and in general decreased gains from trade. Lev contends that such adverse consequences can be mitigated by a public policy mandating the disclosure of financial information in order to re-duce information asymmetries. This paper considers the needs of other users as well as capital market participants by engaging in ethical reflection on the growth in disclosure laws.