Abstract
PurposeThe purpose of this study is to shed light on the tools, processes and negotiations involved in the formation of acceptable current values in the context of goodwill impairment testing. The study raises the questions of how a current value for goodwill becomes a faithful representation and how one expectation about the future becomes more convincing than other expectations.Design/methodology/approachDrawing on the study of associations, the analysis presents a case study of a large, internationally active organisation. By combining field notes, interview transcripts and a variety of documents, the qualitative analysis focusses on strategies and mechanisms of persuasion.FindingsThe findings reveal how epistemological objectivity of current values forms in three moments of relational becoming that codify, depersonalise and proceduralise the valuation task. Further, the study suggests that a convincing argument forms with the help of four enablers: a bricolage of inscriptions, methodological mystification, transformed professional identities and a practical need for closure.Originality/valueThe study contributes with an analysis and illustration of financial accounting as practice, elaborating on the meaning and construction of faithful representation in cases of measurement uncertainty.
Highlights
It [Level 3 fair value] cannot in principle be “known” but is instead a “wished-for” social outcome, whereby the preparer is required to adopt the perspective of the market participant in a neoclassical economic world of the International Accounting Standards Board (IASB’s) imagination
The aim here is to contribute to the emerging field of research that tries to depart from a meta-discussion of current value calculations, investigating how organisations cope with the complexities of faithful representation presented to them
This study aimed to contribute to previous knowledge by illustrating how one wished-for social outcome became more legitimate or faithful than any other
Summary
It [Level 3 fair value] cannot in principle be “known” but is instead a “wished-for” social outcome, whereby the preparer is required to adopt the perspective of the market participant in a neoclassical economic world of the International Accounting Standards Board (IASB’s) imagination. The aim here is to contribute to the emerging field of research that tries to depart from a meta-discussion of current value calculations, investigating how organisations cope with the complexities of faithful representation presented to them In this line of discussion, researchers are interested in understanding the actors, practices and relations that enable preparers, auditors and markets to form a shared understanding, thereby creating epistemological objectivity. From previous literature it can be expected that a shared understanding of a faithful representation that holds an epistemological objectivity claim will be a social activity, where both the process of measurement and the different steps in the calculation (the rules of the game) need to be agreed upon and distributed to many different actors with different aspirations. This study proposes that, to relieve auditors from further investigations, the calculations have to be mystified by involving acceptable external parties and a cascade of inscriptions, traces that are far enough from the organisation that their construction is unknowable even to actors that understand and orchestrate the calculation
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