Development of group accounting in the United Kingdom to 1933

              The Accounting Historians Journal Vol. 11, No. 1 Spring 1984
J. R. Edwards and K. M. Webb
UNIVERSITY COLLEGE, CARDIFF
THE DEVELOPMENT OF GROUP ACCOUNTING IN THE UNITED KINGDOM TO 1933
Abstract: The publication of consolidated accounts is an early example of innova-tive financial reporting procedures being introduced by U.S. companies before they were adopted in the U.K., where Nobel Industries (1922) is generally cited as the first holding company to prepare economic entity based financial reports. This paper produces evidence which shows that the publication of consolidated accounts, by British companies, began at least as early as 1910. Our research nevertheless confirms the generally held view that U.S. developments occurred earlier, and we explore a range of possible explanations for this phenomenon.
Introduction
A major financial reporting development in the United Kingdom, during the first half of the twentieth century, was the publication of consolidated accounts dealing with the combined financial affairs of holding companies and their subsidiaries. Obligations to publish some form of group accounts were introduced during this period by the London Stock Exchange (1939), the Institute of Chartered Ac-countants in England and Wales (1942) and the Government (1947),1 and each of these regulatory bodies expected the informa-tion to be published as a supplement to the traditional legal entity based accounting reports. Many company directors, recognising the severe limitations of legal entity based financial reports, had much earlier made the voluntary decision to publish group account-ing information.
The publication of group accounting information, in the form of consolidated statements, is an early example of innovatory financial reporting procedures being introduced by companies in the United States before they were adopted in the United Kingdom. Whereas consolidated balance sheets were "almost universally adopted"2 in
The authors thank the Social Science Research Council for financial support for this research.