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Article
Publication date: 26 June 2019

Alexandru Preda and Gulnur Muradoglu

This paper aims to investigate a double puzzle, empirical and theoretical. Empirically, can the authors document the influence of groups on financial decisions in investments and…

1402

Abstract

Purpose

This paper aims to investigate a double puzzle, empirical and theoretical. Empirically, can the authors document the influence of groups on financial decisions in investments and trading? Theoretically, if decisions in a group context can be documented, how can we account for them, against the background of the normative models, according to which financial decisions are individualized and atomized? Based on interviews and ethnographic observations with fund managers, analysts and traders, the authors document here decision-making in finance. Theoretically, the authors argue that financial decisions can be explained if, in addition to cognitive processes, the authors take into account the impact of social interactions on the decision-making process. Social interactions are not restricted to imitation processes, and can be seen here as the efforts deployed by decision-makers at maintaining and managing the context of their decisions. The authors present and discuss empirical evidence and argue that the study of social interactions can productively contribute to understanding how decisions are made in finance.

Design/methodology/approach

The data analyzed here have been gathered between 2001 and 2011, and include: interviews with investment professionals (fund managers and analysts) from the UK and Turkey; interviews with individual investors from the UK and the USA; and observations with individual investors from the UK and the USA. This captures decision activities conducted in different regulatory frameworks of those countries. The authors focussed in the interviews on general decision-making practices.

Findings

Conclusion the authors have sought to answer a double puzzle, empirical and theoretical. Empirically, the puzzle is how investors and traders resort to groups in their decision-making. Theoretically, the puzzle consists not only in providing an explanation for such processes but also in taking into account that they do not fit the normative models of decisions in mainstream finance. The argument has been that in addition to the cognitive processes identified and discussed in behavioural finance, the authors need to take into account the impact of social processes as well. Social processes include the efforts deployed by financial decision-makers at maintaining and managing the contexts within which decisions are made. The work of context maintenance is intrinsic to the logic of decision-making. The authors have identified, documented and discussed here the social dynamics in financial decisions with respect to performance, managing group relationships and possible conflicts.

Originality/value

Managing relationships within groups is not without consequences with regard to trading decisions. Oftentimes, avoiding group conflicts – or being confronted with them – leads to decisional adjustments, which have less to do with returns on trades than with the necessity of accommodating social relationships. As several of the interviewees emphasized, making decisions implies consensus and reaching consensus requires accommodating relationships.

Details

Qualitative Research in Financial Markets, vol. 11 no. 4
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 27 April 2020

Alan Lowe, Yesh Nama and Alexandru Preda

The purpose of this paper is to advance a research agenda on the topic of problematising profit and profitability. This paper also acts as an introduction to this Accounting

981

Abstract

Purpose

The purpose of this paper is to advance a research agenda on the topic of problematising profit and profitability. This paper also acts as an introduction to this Accounting, Auditing & Accountability (AAAJ) special section which aims to foster the development of literature focussing on critically evaluating issues surrounding profit and profitability and their sometimes, deleterious effects on society. The authors encourage an interdisciplinary discussion on the concepts of profit and profitability and various ways in which the authors could potentially problematise these concepts.

Design/methodology/approach

The authors undertake a purposive interdisciplinary review to provide context on problematising profit and profitability by briefly discussing the evolution of the concept of profit and by reviewing some contemporary debates and discussions about the role and status of profit and profitability.

Findings

In order to further develop the literature on problematising profit and profitability, it is important to broaden the analytical framework in order to (1) uncover the assumptions that make profitable activities possible as well as justifications of such activities; (2) analyse the practices of profit not only in the sense of computational practices but also in the sense of strategic and rhetorical calculations; (3) evaluate the practices of profit and profitability where they are situated within social and power relationships and (4) connect practices of profit to specific social imaginaries of profit.

Originality/value

In setting out a future research agenda, this paper fosters theoretical and methodological pluralism and encourages box-breaking research in the research community focussing on problematising profit and profitability in various settings. The perspectives offered in this paper provides not only a basis for further research in this critical area of discourse and regulation on the role and status of profit and profitability but also provides emancipatory potential for practitioners (to be reflective of their practices and their undesired consequences of such practices) whose overarching focus is on these accounting numbers.

Details

Accounting, Auditing & Accountability Journal, vol. 33 no. 4
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 May 2020

Alan Lowe, Yesh Nama, Alice Bryer, Nihel Chabrak, Claire Dambrin, Ingrid Jeacle, Johnny Lind, Philippe Lorino, Keith Robson, Chiara Bottausci, Crawford Spence, Chris Carter and Ekaterina Svetlova

The purpose of this paper is to report the outcome of an interdisciplinary discussion on the concepts of profit and profitability and various ways in which we could potentially…

2354

Abstract

Purpose

The purpose of this paper is to report the outcome of an interdisciplinary discussion on the concepts of profit and profitability and various ways in which we could potentially problematize these concepts. It is our hope that a much greater attention or reconsideration of the problematization of profit and related accounting numbers will be fostered in part by the exchanges we include here.

Design/methodology/approach

This paper adopts an interdisciplinary discussion approach and brings into conversation ideas and views of several scholars on problematizing profit and profitability in various contexts and explores potential implications of such problematization.

Findings

Profit and profitability measures make invisible the collective endeavour of people who work hard (backstage) to achieve a desired profit level for a division and/or an organization. Profit tends to preclude the social process of debate around contradictions among the ends and means of collective activity. An inherent message that we can discern from our contributors is the typical failure of managers to appreciate the value of critical theory and interpretive research for them. Practitioners and positivist researchers seem to be so influenced by neo-liberal economic ideas that organizations are distrusted and at times reviled in their attachment to profit.

Research limitations/implications

Problematizing opens-up the potential for interesting and significant theoretical insights. A much greater pragmatic and theoretical reconsideration of profit and profitability will be fostered by the exchanges we include here.

Originality/value

In setting out a future research agenda, this paper fosters theoretical and methodological pluralism in the research community focussing on problematizing profit and profitability in various settings. The discussion perspectives offered in this paper provides not only a basis for further research in this critical area of discourse and regulation on the role and status of profit and profitability but also emancipatory potential for practitioners (to be reflective of their practices and their undesired consequences of such practices) whose overarching focus is on these accounting numbers.

Details

Accounting, Auditing & Accountability Journal, vol. 1233 no. 4
Type: Research Article
ISSN: 0951-3574

Keywords

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Article
Publication date: 11 November 2019

Aziza Laguecir, Christopher S. Chapman and Anja Kern

The purpose of this paper is to examine the organizational construction of profit at the responsibility-centre level, how underlying cost calculations are challenged, and the role…

797

Abstract

Purpose

The purpose of this paper is to examine the organizational construction of profit at the responsibility-centre level, how underlying cost calculations are challenged, and the role of accountants therein.

Design/methodology/approach

This paper analyses profit calculation in a public social housing organization that experienced New Public Management (NPM). Participant observations, archives and interviews inform the study over three years, enabling access to day-to-day practices.

Findings

This study examines a trial of strength that revisited long-existing profitability and cost calculations. Accountants held competing views of how to treat labour costs. Some were anti-programme during a trial of incompatibility, while others were programme defenders. The authors also provide evidence of the stability of an established network and its resistance to the claims of an adversary spokesperson in a trial of strength. The concept of trial of incompatibility proved helpful in showing how the actor networks within OMEGA played out the tension between profit orientation and the social mission of offering affordable dwellings.

Research limitations/implications

The paper provides rare qualitative data on the significant and complex role of calculative costing choices in determining intra-organizational profitability and its interference with the inherent social mission of the organization.

Practical implications

The authors suggest that profitability calculations are influenced not only by economic context but also by different views of organizational actors regarding how to calculate profit. These calculations would benefit from a more detailed and explicit documentation of reasons for choices made, given the potential for different and, in principle, equally valid approaches. The authors provide further evidence of the complexity of the public social housing sector.

Social implications

This research points to a departure from the mission of public social housing in the face of NPM reforms and further questions the compatibility of a profit orientation with the provision of affordable dwellings.

Originality/value

The findings show intra-accounting variation regarding a specific element of profit calculation (labour costs) relating to the organization’s wider mission and status.

Details

Accounting, Auditing & Accountability Journal, vol. 33 no. 4
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 11 July 2019

Darlene Himick and Kate Ruff

Profit is often moralized by activists, but scant research has carefully examined what profit is for these activists or how they use it to create a more just world. The purpose of…

1491

Abstract

Purpose

Profit is often moralized by activists, but scant research has carefully examined what profit is for these activists or how they use it to create a more just world. The purpose of this paper is to investigate how social movements use counter accounts of profit as tools of resistance.

Design/methodology/approach

A multiple case study design, informed by framing theory, is used to trace the framing of profit from activists’ counter accounts to actions they precipitated. Specifically, the study examines counter accounts of profit from the UK abolition movement, Médecines Sans Frontières access to essential medicines campaign and Brigitte Bardot Foundation’s opposition to the Canadian seal hunt, and how their framings of profit influenced change.

Findings

Activists reframe profit to create visibilities and bridges to the suffering of distant others. Reframing the calculation and boundary of profit is a strategy to elicit moral outrage, hope and ultimately a more just world. Through these reframings, activists in three different social movements were able to change the possibilities of who and what can be profitable, and how.

Social implications

The inherently incomplete nature of accounting frames give rise to accounting’s vulnerability to non-accountants to assert their views of a moral profit. Accounting therefore is both a means of control at a distance but also “emancipation at a distance.”

Originality/value

Scholars have asserted that accounting can be used for resistance, few studies have examined how. By examining how activists assert what profit is – and should be – the paper documents and theorizes profit as contested and highlights accounting’s emancipatory potential.

Details

Accounting, Auditing & Accountability Journal, vol. 33 no. 4
Type: Research Article
ISSN: 0951-3574

Keywords

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