Building trust in crisis management: a study of insolvency practitioners and the role of accounting information and processes

Joyce, Y. (2020) Building trust in crisis management: a study of insolvency practitioners and the role of accounting information and processes. Contemporary Accounting Research, 37(3), pp. 1622-1657. (doi: 10.1111/1911-3846.12577)

Abstract

This paper seeks to understand how insolvency practitioners attempt to build trust with a heterogeneous creditor body during the crisis of formal insolvency and the role accounting information and processes play. Accounting information is mobilized in different ways according to how insolvency practitioners believe the information will be interpreted and valued. This paper suggests specific qualitative characteristics, accounting principles and processes which appear to enhance trust building in a crisis context. These include perceived objectivity, comparability, cash flow accounting, ‘matching’ of secured liabilities with secured assets and ‘crisis’ audit. The value ascribed by insolvency practitioners to maintaining specific creditor relationships also appears relevant to trust‐building activities. A ‘tit for tat’ strategy emerges with secured creditors, whereby insolvency practitioners engage in demonstrable fee write‐offs, but on the implicit understanding that future, lucrative work will come their way. This study points to the importance for researchers and policy makers of understanding the ‘desirable’ properties of accounting through informed understandings of how and why that information is mobilized and received in specific relationships between people.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Joyce, Professor Yvonne
• Authors: Joyce, Y.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: Contemporary Accounting Research
• Publisher: Wiley
• ISSN: 0823-9150
• ISSN (Online): 1911-3846
• Published Online: 22 November 2019
• Copyright Holders: Copyright © 2019 CAAA
• First Published: First published in Contemporary Accounting Research 37(3): 1622-1657
• Publisher Policy: Reproduced in accordance with the publisher copyright policy