Usefulness unfulfilled: a performance review of value added statements

Abstract

The opportunity to achieve a major turning point in accounting history was the publication of The Corporate in the UK in 1975. It recommended several new reports, but its recommendations were largely ignored. One of the recommended reports, however, the value added statement, has been adopted by a number of jurisdictions around the world with stakeholder accountability as a prime objective. This paper surveys the arguments for the value added statement being for the generality of statement users what the income statement and statement of financial position have for stockholders and bondholders alone. The actual use made of the statements around the world and their usefulness is then reviewed, and the reasons for a quite widespread disappointment are discussed. Finally, the paper relates the value added statement to the ruins of the labour theory of value and suggests future research to determine the contribution value added statements could make to determining the extent to which a corporation's results are the spoils of a zero sum game under oligopolistic conditions or value genuinely created for the industry or economy a whole.