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9 Account. Econ. Law 1 (2019)

handle is hein.journals/acteol9 and id is 1 raw text is: Eduard Braun* The Ecological Rationality of Historical Costs and Conservatism DOI 10.1515/ael-2015-0013 On the Evolutionary Advantage of Cost Accounting and Conservatism 1 Braun, E. (2016). The Ecological Rationality of Historical Costs and Conservatism. doi: 10.1515/ ael-2015-0013. 2 Basu, S. & Waymire, G. (2017). Historical Cost and Conservatism Are Joint Adaptations That Help Identify Opportunity Cost. doi: 10.1515/ael-2016-0070. 3 Saito, S. & Fukui, Y. (2016). Whither the Concept of Income? doi: 10.1515/ael-2016-0013. 4 Tang, V. (2017). The Role of Accounting and the Debate between Historical Cost and Fair Value. doi: 10.1515/ael-2016-0066. 5 Baker, C. (2016). Commentary on Braun's The Ecological Rationality of Historical Costs and Conservatism doi: 10.1515/ael-2016-0061. 6 Braun, E. (2017). Concluding Remarks on the Symposium on the Evolutionary Advantage of Cost Accounting and Conservatism. doi: 10.1515/ael-2017-0049. Abstract: The principles characterizing the traditional revenue-expense approach to accounting cannot be traced back to a distinct event. I argue that they are ecologically rational. Their functionality is the result of cultural evolu- tion, not of unitary human design. This is the reason why the efforts to defend them against the balance-sheet approach endorsed by standard-setters have encountered severe difficulties. Only the latter is clearly based on a coherent model of the economy, namely neoclassical economics. I further argue that a solid basis for explaining the rationale of the culturally evolved accounting principles can be found in behavioral economics. These principles are in line with human behavior as found in numerous laboratory and field experiments. It is especially with respect to Prospect Theory that a close parallel can be identified. I combine this observation with a market process view of the econ- omy. Financial accounting according to the balance-sheet approach does not add new information to the market process; it only summarizes on the firm level information provided by the market. In contrast, the revenue-expense approach provides private information to the market A la Hayek (1945). The revenue- *Corresponding author: Eduard Braun, Institute of Management and Economics, Clausthal University of Technology, Julius-Albert Str. 2, 38678 Clausthal-Zellerfeld, Germany, E-mail: eduard.braun@tu-clausthal.de http://orcid.org/0000-0002-1752-4287 DE GRUYTER Account. Econ. Law 2016; 20150013

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