Financial control, managerial control and accountability: evidence from the British Cotton Industry, 1700–2000 Steven Toms * Department of Management Studies, University of York, Sally Baldwin Buildings, Block A, Heslington, York YO10 5DD UK Abstract The paper seeks to identify the underlying and long run historical determinants of accounting practices. These prac- tices include the nature and relative importance of management and financial accounting techniques, together with the mediating roles of corporate finance and especially financial markets. To explain historical variation in the application of these techniques the paper introduces an analytical model. The model is based on the principles of historical mate- rialism and hence comprises objective and subjective elements. Definitional categories are borrowed from MarxÕs anal- ysis of the workings of capitalism, and extended to include contexts where there is extensive socialization of capital, as manifested by the pooling of investments in liquid financial markets. To examine the detailed implications for account- ing change, the model is then applied to a longitudinal case study of the British cotton textile industry. The paper shows that techniques of financial and managerial control and mechanisms of accountability can be explained by the dynamic interaction of capital centralization and capital socialization. Ó 2004 Elsevier Ltd. All rights reserved. What determines the use of accounting tech- niques by business organizations in a capitalist economy and what determines their adoption at different periods in time? Is it true for example to suggest that there was a reluctance amongst early industrialists to engage in management accounting techniques (Pollard, 1965), or that management accounting has subsequently experienced a rise and fall, and that this fall came at the expense of financial accounting (Johnson & Kaplan, 1987)? Does this in turn imply a fall and rise of financial accounting? Some researchers have suggested that the introduction of new accounting techniques were a rational response reflecting the decision- making needs of entrepreneurs (Boyns & Edwards, 2000; Chandler, 1977; Johnson & Kaplan, 1987). Other explanations have located the role of accounting outside the 20th century conception of the rational by adopting a Foucaultian perspec- tive to contrast the role of accounting in dispersed ÔmanufactoryÕ with more integrated factory organi- zation (Walsh & Stewart, 1993) and to trace the origins and diffusion of specific accounting 0361-3682/$ - see front matter Ó 2004 Elsevier Ltd. All rights reserved. doi:10.1016/j.aos.2004.07.003 * Tel.: +44 1904 434122; fax: +44 1904 433431. E-mail address: st27@york.ac.uk www.elsevier.com/locate/aos Accounting, Organizations and Society 30 (2005) 627–653