Disciplining building societies by accounting-based regulation, circa 1960

Bernardo Bátiz-Lazo*, Masayoshi Noguchi

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

4 Citations (Scopus)


Taking as its point of departure the rules regulating accounting practice, this article focuses on the use of accounting numbers and ratios to regulate the specific behaviour of reporting entities. In particular, the corporatist analysis provides a framework for exploring the use of accounting-based regulation to discipline those depository financial institutions that depart from industry norms. Empirical support built upon the legislation enacted in 1959 and 1960 which set performance parameters for building societies and gave the Chief Registrar of Friendly Societies new powers of intervention. These powers and parameters were used together with accounting ratios (which were generally recognised as financially sound within the industry) to discipline building societies. Although only a tiny fraction of the societies were ultimately sanctioned, they all acknowledged important deviations from specified accounting-based criteria. In some cases accounting-based criteria were effective in driving societies to dissolution, while others, which avoided immediate dissolution were forced to improve their governance and systems of internal control. Intervention was further activated under the interdependent relationship formed between the Registrar of Friendly Societies and the Building Societies Association. Together they successfully lobbied state authorities to discipline societies outside the industry association. As a result, the evidence documented in this paper sheds light on the dynamics upon which accounting-based regulation came to be constructed and implemented.

Original languageEnglish
Pages (from-to)1-17
Number of pages17
JournalBritish Accounting Review
Issue number1
Early online date18 Jul 2013
Publication statusPublished - 1 Mar 2014
Externally publishedYes


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