The rise and fall of the UK Operating and Financial Review

Nicholas Rowbottom, Marek Schroeder

    Research output: Contribution to journalArticlepeer-review

    5 Citations (Scopus)
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    After a lengthy period of consultation and the preparation of a reporting standard, legislation was passed in March 2005 requiring UK listed companies to disclose a separate statement of management commentary, an Operating and Financial Review (OFR). In November 2005, the legislation was unexpectedly and controversially repealed during a speech by Chancellor Gordon Brown to the largest business lobbying group in the UK. The paper analyses the decision to abolish the statutory OFR by drawing upon internal, private governmental documents prepared by the Treasury ministry to brief the Chancellor, publicly disclosed as a result of a legal challenge against the repeal decision. The documents reveal how a deregulatory ideology motivated the Government to construct the repeal of the statutory OFR as a deregulatory opportunity designed to bolster political support for the UK Labour party. The paper draws on the conception of Lukes’ 3-D power to analyse how deregulatory ideology influenced regulatory thinking in the absence of any concerted political lobbying. In demonstrating how the effects of 3-D power were subject to the perceptions of regulatory officials, the case illustrates the unpredictable effects of power relations on accounting regulation.
    The paper draws on the conception of ‘3-D’ power to analyse how a political ideology prevalent in the pre-financial crisis environment came to influence accounting technology with unexpected consequences. Using data rarely disclosed in the public domain, it illuminates the ‘black boxed’ processes underlying regulatory decision making. The paper details how the Treasury were politically motivated to influence corporate reporting policy in the absence of concerted political lobbying, and why this episode of government intervention led to an unanticipated regulatory outcome.
    Original languageEnglish
    Pages (from-to)655-685
    Number of pages30
    JournalAccounting, Auditing and Accountability Journal
    Issue number4
    Early online date29 Apr 2014
    Publication statusPublished - 2014


    • Operating and financial review
    • Narrative reporting
    • Accounting standards
    • Management commentary


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