Use of historical data in accounting research: The case of the American Sugar Refining Company

              The Accounting Historians Journal
Vol. 24, No. 2
December 1997
Robert Bricker
CASE WESTERN RESERVE UNIVERSITY
and
Kevin Brown
CASE WESTERN RESERVE UNIVERSITY
THE USE OF HISTORICAL DATA IN ACCOUNTING
RESEARCH: THE CASE OF THE AMERICAN SUGAR
REFINING COMPANY
Abstract: In 1908, the American Sugar Refining Company
(ASR) reversed its long-held policy of secrecy as to its
financial condition and performance. Prior work, applying
contemporary capital market methods to ASR security price
data of that period, has suggested a value to ASR
shareholders of this policy reversal. This paper examines
the historical record of that time and presents additional
evidence on this matter, particularly in terms of identifying
potentially confounding events occurring during the period
under study. The results of this analysis suggest a difficulty
in attributing observed abnormal returns to ASR's secrecy
policy reversal on the basis of the results obtained from
applying capital markets methods. This analysis is useful
for scholars interested in applying modern capital market
methods to historical data. It highlights the significance of
the possible effects of contemporaneous historical events,
focuses attention on the importance of a deep understanding
of the historical period studied, and suggests a value in
combining historical and empirical-markets methods to
gain a richer understanding of the events and conditions in
the time period under study.
The application of modern capital markets methods to explore
accounting issues in historical time periods has attracted increased
interest in recent years. One such study, Porter et al, (1995) (hereafter
PSW) examine the effects of American Sugar Refining's (ASR's) 1908
reversal of a financial secrecy policy to determine the value of voluntary
disclosure per se and voluntary disclosure policy. They find in part,
Submitted October 1995
Revised February 1997
Accepted March 1997