Challenging the predictive ability of accounting techniques in modelling organizational futures

Abstract

This article considers the role of accounting in organisational decision making. It challenges the rational nature of decisions made in organisations through the use of accounting models and the problems of predicting the future through the use of such models. The use of accounting in this manner is evaluated from an epochal postmodern stance. Issues raised by chaos theory and the uncertainty principle are used to demonstrate problems with the predictive ability of accounting models. The authors argue that any consideration of the predictive value of accounting needs to change to incorporate a recognition of the turbulent external environment, if it is to be of use for organisational decision making. Thus it is argued that the role of accounting as a mechanism for knowledge creation regarding the future is fundamentally flawed. We take this as a starting‐point to argue for the real purpose of the use of the predictive techniques of accounting, using its ritualistic role in the context of myth creation to argue for the cultural benefits of the use of such flawed techniques.

Citation

Cooper, S., Crowther, D. and Carter, C. (2001), "Challenging the predictive ability of accounting techniques in modelling organizational futures", Management Decision, Vol. 39 No. 2, pp. 137-146. https://doi.org/10.1108/EUM0000000005419