ABSTRACT
This chapter considers the implications of the laissez-faire philosophy for corporate accountability. The development of accounting and audit practices among British companies — in the absence of regulation during this time-period — was given a high profile by the architects of positive accounting theory, Watts and Zimmerman. Their study of British financial reporting developments in nineteenth-century Britain convinced them of the ability of market pressures to achieve adequate accountability, in the absence of regulation, as a means of reducing agency costs. The chapter reveals the nineteenth-century history of corporate accountability is rather more complex than Watts and Zimmerman suggest. Outside parties might play a part in developing new methods of accountability with the British professional accounting bodies engaging in that process. Reliance on market forces or regulation as the appropriate mechanism for achieving the desired level of accountability comprises a range of possibilities.
