The Accounting Historians Journal Vol. 13, No. 1 Spring 1986
Baladouni UNIVERSITY OF NEW ORLEANS
FINANCIAL REPORTING IN THE EARLY YEARS OF THE EAST INDIA COMPANY
Abstract: The first archival period (1600-1663) of the (English) East India Company is marked by an absence of accounting materials. A small number of financial statements have escaped peril, however, and found their way to the India Office Library and Records in London. Of these, two are of singular interest. Along with related Company minutes, these statements are analyzed and interpreted in this paper. They shed some light on the reporting practices and concepts of the early years of the incorporated joint-stock company.
The history of modern English corporate accounting and report-ing begins with the incorporated joint-stock company. Although this form of business organization emerged in England in the second half of the 16th century, it was not until the foundation of the East India Company in 1600 that it acquired distinctive charac-teristics.
For the first two centuries, the incorporated joint-stock company developed rather slowly. In the case of the East India Company, for example, permanent capital, a characteristic of this form of enter-prise, did not exist until some sixty years after the formation of the Company [Scott, 1968, Vol. 2, pp. 122-3, 128]. From 1600 to 1657, the Company operated with terminable stocks, issued for a single or a series of voyages. At various points in the life of a particular stock or venture, available proceeds were divided pro rata and distributed to the adventurers (shareholders). The distribution of proceeds was actually liquidation of invested capital as well as dis-tribution of profits. For this reason, it is appropriate to refer to these distributions as "divisions" [Scott, 1968, Vol. 1, pp. 153, 159-60].
This study was made possible by a grant from the American Philosophical Society. Two transcripts of Crown-copyright records in the India Office Records appear in this paper by permission of the Controller of Her Majesty's Stationery Office.