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Hicksian income in the conceptual framework

Bromwich, Michael, Macve, Richard and Sunder, Shyam (2010) Hicksian income in the conceptual framework. Abacus, 46 (3). pp. 348-376. ISSN 0001-3072

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Identification Number: 10.1111/j.1467-6281.2010.00322.x


In seeking to replace accounting conventions by concepts in the pursuit of principles-based standards, the FASB/IASB joint project on the conceptual framework has grounded its approach on a well-known definition of income by Hicks. We welcome the use of theories by accounting standard setters and practitioners, if theories are considered in their entirety. Cherry-picking parts of a theory to serve the immediate aims of standard setters risks distortion. Misunderstanding and misinterpretation of the selected elements of a theory increase the distortion even more. We argue that the Boards have selectively picked from, misquoted, misunderstood and misapplied Hicksian concepts of income. We explore some alternative approaches to income suggested by Hicks and by other writers, and their relevance to current debates over the Boards' conceptual framework and standards. Our conclusions about how accounting concepts and conventions should be related differ from those of the Boards. Executive stock options (ESOs) provide an illustrative case study.

Item Type: Article
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Additional Information: © 2010 Wiley-Blackwell
Divisions: Accounting
Subjects: H Social Sciences > HF Commerce > HF5601 Accounting
Date Deposited: 11 Apr 2011 15:38
Last Modified: 16 May 2024 01:07

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