Accounting choice and a theory of crisis: the cases of post-privatization British Telecom and British Gas

Article Abstract:

It is contended that positive accounting theory cannot explain the accounting choices of organizations. This theory is characterized by the simplification of the motives attributed to managers and politicians, of methodology, and of the nature of social dynamics. It is argued that such a framework does not fully reflect the complex and rich social contradictions created in the interaction of crisis avoidance in a basically disequilibrial capitalist society. An alternative paradigm is proposed, which is a neo-Marxist theory of crisis management based on the work of Habermas (1986, 1979). This approach is applied in the analysis of the accounting choices of British Telecom and British Gas. The study's findings are discussed.

Gas Utilities, Natural Gas Distribution, Gas Production and Distribution, Models, Analysis, Accounting and auditing, Accounting, Crisis management, Centrica PLC

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The effect of regulatory announcements on the cost of equity capital of British Telecom

Article Abstract:

A study was conducted to examine the effects of regulatory announcements on British Telecom's (BT) systematic risk between Dec. 1984 and Dec. 1993. Such announcements affect the telecommunications industry in terms of competition, services supply and pricing policy. The study used a methodology in which the beta coefficient could vary over time. The findings indicate that BT's cost of equity capital are likely to be influenced by regulatory announcements that bolster the price of BT services and those that affect the firm's services supply.

Laws, regulations and rules, Industry regulations, Government regulation of business, Trade regulation

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The cost of capital under conditions of personal taxes and inflation

Article Abstract:

A firm's weighted average cost of capital is estimated considering corporate and personal taxes and inflationary conditions. Results indicate that the firm's cost of capital increases as a result of personal taxes and inflation, but that this growth is less than 100%. The findings also show that the cost of capital considered is consistent with existing valuation models. An extension of Hamada's (1972) work on the relationship between leveraged beta and financial leverage is also presented.

Inflation (Finance), Income tax, Inflation (Economics)

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