Corporate Governance and Accounting System

Critical Perspectives on Accounting 16 (2005) 797–823
Corporate governance and accounting

systems: a critical perspective
Yvon Pesqueux∗
C.N.A.M., Développement des Systèmes d’Organisation, 292,
rue Saint-Martin, 75141 Paris Cedex 03, France
Received 7 April 2003; received in revised form 20 July 2003; accepted 30 August 2003
Abstract
In this paper, corporate governance is understood as an ideological perspective of the superiority

given to the interests of a bourgeoisie, the accounting systems being only the place of validation of these
interests. Mixed with the illusion of accounting systems seen as giving informations to shareholders
taken as rational, corporate governance allows to build a better mask of dominant interests by focusing
the attention on conflicts of interests between shareholders and managers. It induces to think that
the structuralization of a device of control by and around the board of administrators could allow a
shareholders activism which would possess a “true” democratic substance, diverting then of the “real”
ideological project of corporate governance. The demonstration ends with a criticism of the role of
auditing firms considered as broadcasting a managerial ideology.
© 2004 Elsevier Ltd. All rights reserved.
Keywords: Broadcasting; Managerial ideology; Democratic substance
1. Introduction
In a strict sense, corporate governance is concerned by the exercise of power in the

Incorporated company where one share—one vote is the legal rule—at the same moment
equaliterian and unequalitarian but also by the use of accounting systems. Equaliterian
because, outside exceptions, all the shares have the same weight. Unequalitarian, because if
someone possesses a sufficient percentage of the capital, he is guaranteed to be able to vote
for himself in equity towards the principle of property rights and then to decide for the others.
∗ Tel.: +33-1-40-27-21-63; fax: +33-1-40-27-26-55.
E-mail address: pesqueux@cnam.fr (Y. Pesqueux).
URL: http://www.cnam.fr/depts/te/dso.
1045-2354/$ – see front matter © 2004 Elsevier Ltd. All rights reserved.
doi:10.1016/j.cpa.2003.08.010
798 Y. Pesqueux / Critical Perspectives on Accounting 16 (2005) 797–823
That is why accounting systems do not really have neither their postulated neutrality nor their
ability to give a “true and fair view” outside a social game which has evolved correlatively
with the question of ‘corporate governance’ last years, question linked with capitalism
seen as a real political order. In fact, ‘initiates’ has always existed within companies and the
accounting data has always been unable to do something against that evidence. It means that
accounting systems are also managed for an illusion—that of shareholders ‘readers’ of the
accounts—to defend an ideology of efficient financial markets. Which kind of shareholders
are really able to read them? Accounting systems produce ‘hermetical’ data and they are
made to be hermetical. The question is to understand why?
Corporate governance raises the question of examining the power devoted to shareholders—
seen as owners of the company—regarding that of the managers (executives in fact, man-
agers being confused with executives), by considering specificities such as the emergence
of a technostructure (executives would differ from ‘owners’ and would tend, because of
their expertise, to build niches for themselves). The argument of an efficiency of a market
of labor, that of the executives, will be there denied for another argument which is that of a
belief in the efficiency of a corporate governance system which would be a guarantee for a
bourgeoisie to act ‘hidden.’ ‘Hidden’ because accounting systems will recover it with the
shadows of the expertise named ‘transparency.’ How ‘transparent’ accounting systems do
operate in such conditions?
Corporate governance appears when the archetypical actor (the shareholder) evolves
from a capitalism where the power of the owners, consolidated by the support of institu-
tional investors of a ‘traditional’ type has turned toward a capitalism where the apparition
of mutual investment funds changes the social game in an ‘universe’ where the weight
of financial investments is structurally more important than previously. Are the correla-
tive accounting systems really made for them? And these funds are themselves managed
by ‘professionals’ (executives and managers). Do they really read these accounts to take
their decisions? If it is the case, accounting systems really belong to the ideology of ef-
ficient markets which has to be examined in its correlation with corporate governance
today.
Corporate governance is considered here as the current formulation of an ideology
(Pesqueux, 2000) of the superiority given to the interests of a bourgeoisie (‘classic’ perspec-
tive since Karl Marx), the accounting systems being only the place of validation of these
interests. Mixed with the illusion of accounting systems built to inform shareholders seen
as ‘rational,’ corporate governance produces the mask of dominant interests by focusing
the attention on the importance of a so called ‘conflict of interests’ between shareholders
and managers. It induces to think that the structuralization of a device of control by and
around the board of administrators could establish the base of a shareholders activism which
would possess a ‘true’ democratic substance, masking then the real ideological project of
corporate governance.
The paper is built on the following way:
– An understanding of the concept of ideology in the light of its last theoretical develop-
ments.
– A demonstration dedicated to corporate governance seen as masking the interests of a
bourgeoisie.
Y. Pesqueux / Critical Perspectives on Accounting 16 (2005) 797–823 799
– A criticism of the illusion of rational anticipations considered as founding the behavior

of the actors of financial markets.
– The new legitimacy of financial funds and pension funds.
– A criticism of the role of auditing firms which will be considered as broadcasting a
managerial ideology.
2. Ideology and organization
Before giving an understanding of a political content given to financial markets today in

relation with corporate governance and accounting systems, we have to give some compre-
hension about this concept.
We shall here investigate the postulate that, at a given moment, there are “good reasons”
for speaking about an organization in a “certain way.” It is then necessary to investigate the
universe of ideology and the fact that it shapes a “certain way” of speaking and that it tends
to ‘create’ a world coherent with its discourse. The ideology is taken here as a producer of
representations and of justifications. What is in question here, is the deformation, the status
of the proof relevant for representations in an ideological context. The representations are
related with an internal structure of the world the validation of which is object of science as
well as with the construction of a truth in a project of “knowledge” in relation with this world.
Ideology is close to the concept of culture because it raises the problem of the contingency
of the representation in a system of values. As for cultural life, it is, with ideology, question
of “managing” connections between elements of representations. The concept of system of
values indicates that ideology, as well as culture, is a process of evaluation. Ideology and
culture have something to do with a process of identification and are both the support of a
project of life.
Before continuing more on the status of the concept of ideology, it is necessary to clarify
the content of two related notions: the notion of value and that of rule because ideol-
ogy is a process of construction and legitimization of shared values which give sense to
rules.
2.1. The notion of value
There are several domains of application for the notion of value: Economics, Ethics,
Aesthetic, Politics, Social life, etc. In a relative understanding, the notion of value finds
its foundations in Economics in relation with utility. We have the same conception in the
charming aspect of a character: intelligence is desirable, useful and then possesses a value
but this meaning is connected with the idea of social value. In front of this conception,
there is the meaning of an absolute value, as in the field of Ethics where this concept holds
an essential place for morality. The concept of value raises also the question of the goal
(to follow ‘such’ value) which can belong to aesthetical, ethical, ideological, political or
religious order. The actor adjusts his behavior with the end he forces himself. The rational
action in value is ordered by the followed values and is the keypoint of the morality of
conviction for Max Weber (Gesinnungsethik) which is characterized by its irrationality
compared with the rational activity in end (Zweckrational).
2.2. The notion of rule
The idea of rule sends back to that of consciousness because a rule is only a conscious
rule. It is necessary to distinguish the rule from the habit because it is necessary to know
and to recognize rules to conform to them. The rule indicates the prescripted behavior in
precise circumstances and has no universal value. There is no main rule in a strict sense.
For example, the moral law indicates the right rule in Ethics. The rule is then applied within
the limits of a situation whose circumstances have to be relatively stable. On the hedge of
circumstances coming to justify the existence of a rule, is the agreement. The rule is then
going to oscillate between the agreement in its purely formal foundations and the reference
to concrete social situations. It possesses at the same moment the arbitrary function of a
‘rule of the game’ and that of a rationality in relation with a goal. The concept of rule
contains also the idea of the justifiable or inviolable imitation. There will be aesthetic rules
(to be an artist would then be doing things as they have to be done, in the style of . . . ) as
well as rules are connected with ideology (it then is a question of shared values). The rule
is then taken as a justifiable reference to the state of the art recognized as a fundamental.
To clarify the connections which can be established between representations and the
represented “object,” in particular because of the necessity of discussing the deformations
which occurs in the process of representation, we shall now analyze the concept of ide-
ology. After an introduction dedicated to the question of the deformation inherent to the
representation because of the interference with ideology, we shall analyze successively the
concept of ideology in the light offered by the sociological perspective, essentially taken
from Raymond Boudon before quoting the political perspective, essentially taken from
Jean Baechler. It is finally with the conclusion that the empathetic aspect of ideology will
be underlined from what is qualified as “sociologization” as well as ‘politicization‘ of the
concept, traditional since Karl Marx. It will then be briefly made a reference to the project of
conformity of the behavior through the concept of imitation to draw the outlines of ideology
seen as an “attractor.”
2.3. About ideology
The concept is particularly difficult. It benefits and suffers at the same time of two major
influences in its foundations: that of a political perspective with Marx and Engels and that of
the sociological reaction (e.g. from Max Weber to Raymond Boudon and Pierre Bourdieu).
In a strict sense, as any concept built like that, ideology is the science of ideas. The suffix
logos indicates two things: it is a question of proposing a “logic of” and a “speech on,”
the “logic of” being understandable by the “speech on.” Ideology is correlative, during the
XVIIIth century, with the encyclopedic project conducted by Diderot and d’Alembert as
far as it is there in question to classify ideas were techniques are themselves seen as ideas.
The concepts of ideology and technology (in its primary sense) were then built.
In a ‘normal’ meaning today, ideology is seen as a “theoretical thinking which believes
to develop abstractly on its own data, but which is really the expression of social facts”
(Lalande, 1991). This meaning shows two aspects of the concept: its ‘politicization‘ and
its “sociologization.” It is why it is impossible to “escape” from ones ideology. Ideology
represents the false idea, the justification of interests, passions. The definition of ideol-
ogy is stuck between a neutral concept representing a dogma (the ideology of a society,
a party, a social class) and a pejorative meaning used to downgrade the presuppositions
of the others. The neutral meaning tends to attribute it some characteristics of an epis-
temological order. The dogmatic meaning allows to deal with dominant opinions (in a
social group) or rules seen as a project formulated by a category in front of the others.
The pejorative meaning emphasizes the aspect of false idea, justification of interests and
passions.
In both cases, the ideological “system” possesses its appropriate logic to base represen-
tations (models, images, myths, etc.). As underlined it, Louis Althusser (Althusser, 1996)
ideology has to be distinguished from the science seen as a system of representations be-
cause of the pratico-social function of ideological representations instead of the theoretical
function of scientific representations. The ideological interpretations are not the product
of concrete experiences but a distorted knowledge coming to force the individual to mask
the elements of real situation. Ideology is conservative as far as its aim is to stabilize a
given state. Ideology is not a vision of the world (which refers to the historic frame in
which it is built); it operates by degradation of the critical sense because of its objective
of identification in a group (important topic in organized action). The privilege granted to
the present life is filled with scientific virtues and authorizes to question the past according
to the opinions which dominate today. For what concerns us here, there would have been
always companies, organizations, etc.
A scientifical theory can play the role of an ideological justification. It is the case with
the concept of equilibrium within a society or an organization that should be then fatally
a stable system (to justify any opposition to change or the unambiguous change promoted
by one of its categories). The use of this concept of equilibrium allows the discourse of
change. It is that misuse of the concept of equilibrium which establishes, for example,
the current “sociologization” of ideology with the aspect of changes “necessary” for the
preservation of the social stability. The theories of equilibrium are particularly affected by
the ideological diversion. This diversion intervenes by “sursaturation” of causal clauses
with the dichotomization between “friendly” factors and “enemy” factors. The sociolog-
ical origin of a theory does not imply a priori to suspect its scientific validity. It is the
“ideologization” of the scientific and sociological theories that raises problems. The mobi-
lization of Anthony Giddens’s interactionnist perspective (Giddens, 1987) allows the idea
not of an ideology which is imperative in itself but of an ideology which is divided into a
triadic logic: ideology—representations—behavior.
Always to support the thesis of the ‘ideologization’ of sociology, a reference can be made
to two other authors of this field (Boltanski and Thévenot, 1991) and the way by which their
thesis and the model which is connected to it, is empathetic. The general subject of their
work concerns the relations between agreement and discord. The authors are going to
build a frame allowing to analyze by means of theoretical instruments the various logics of
action (in reference to trade, civil, industrial “worlds,” etc.). In a project of overtaking of the
cleavage between sociology and economics which is their essential contribution, the authors
are going to build six different “worlds” which establish a kind of cities corresponding to
forms of majorities of opinions. The hypothesis they defend is that the identification of
these worlds is a necessary phase to build agreements among the agents by the recognition
of a real “imperative” in the process of justification. The authors are going to present the
various worlds from the analysis of textbooks and guides aiming at teaching the way to
behave in situations governed by each of the forms of very common situations related with
these “worlds.” These two authors propose us a decoding method for ideological bias. But
the use of these concepts by other authors to argue their own thesis may be very ideological.
For example, it is the case in the use of the concept of “the city of trading” to express the
project of what would be operating today for public utilities.
Representation and ideology raise the problem of reporting the “reality” because of the
deformation of that reality carried by representations: this deformation is inherent to the
process of representation in itself. Does it build an ideology or is ideology the cause of
that deformation? Is it possible to escape of it or not? In fact, the process of representation
establishes the represented by the intermediation of a speech. Ideology belongs also to the
discursive order. The ideological use of a model is going then, in an ideological perspective,
to create “scientifically” an understanding of the social order, a reality becoming, in a sense,
as socially validated reality in terms of a shared ideology.
The difficulty of investigation of the concept of ideology grows when it is necessary
to quote that scientific theories can become integrated into ideological understandings.
The ideological context can favor the release of a scientific method as far as the status
of the proof—as that of the error—possesses a specific “location” in human sciences and
then in management sciences (if we accept their existence) because the proof arises from
a triangulation model—literature—environment of one (or of some) observation (s). By
offering an interpretation more empathetic or still by strengthening the dominant speech, the
ideology brings to reduce the choice between parallel scientific conceptions by privileging
the usage of some of them rather than the others.
It is partially in that project that Raymond Boudon was interested and that is why we
shall consider him in the universe of what was qualified higher of “sociologization” of the
concept of ideology. In a book now considered as a classic, the author recognizes indeed
that the models developed by social sciences establish simplifications of the reality and
infer strategies of justification (“The ideologies are a natural ingredient of the social life.
The ideologies appear not although the human being is rational but because he is rational”
(Raymond, p. 22)). The social actor is “always situated.”
Ideology is related with an “acceptable” truth by leaning on doctrines of scientific type
and by establishing a link between symbolic acts (with the use of metaphors) and realities
by arguing in a scientific type.
“Today the company should change” has to be accepted without possible discussion (and
nevertheless of what change is in question). For which interests it is formulated? And more
simply, what is a company which changes? How is it possible to perceive this change from
the observation of the facts?
Ideology cannot be studied independently of communications problems and the cognitive
and ethical resources of theories. The mediation of the speech (and metaphors) is important
here. The “metaphoric” reception of theories will induce the scientific and ideological
status of the proof (and bases the references to the question of a truth “in legitimacy”).
Ideology develops itself also in the heart of the scientific work. It operates a link between
the truth “assigned by force” and the truth in legitimacy and strengthens the power of the
adopted analysis. The “sociologization” of the concept of ideology has different effects in
comparison with those of the “forced passage” quoted by Marx.
It is also possible to say that paradigms concern ideologies. The validity “in legitimacy”
of a paradigm is also related to its ‘fertility.’ It is important to put some light on the ide-
ological process in the way through which, after having speaking about organization in a
certain manner, it tends to create the elements of reality related with this discourse. It is
so necessary to distinguish between the validity of a configuration and interests (which are
the main source of ideology). The seduction, the sympathy created by a model confers a
‘superior’ value to a theory in comparison with others. It is why ideology is also available
for a scientific theory. A particular mention should be made for the ideological gliding
appearances inherent to globalizing theories. “In other words, it is necessary to distinguish
carefully between the social broadcasting of the successful ideas and ideologies, and their
political use (. . . ) By confusing these two aspects, one exposes himself to two risks: to
confer on the successful ideas more power than they have in themselves; and to give to
the received ideas an exclusively political origin, when, at our time especially, they have
a scientific origin. Now, if one gives to the successful ideas and to the ideologies a purely
political origin, it becomes difficult to explain their credibility” (Raymond, p. 279).
Raymond Boudon underlines also the importance of the return of modified ideologies
(being able to be perceived as new ideas). The explanation, rather of the domain of science
is more convenient than the prediction (rather of the domain of ideology) but the ideological
aspect of the science is the prediction and the scientific side of ideology is the explanation.
“The fact that effective ideologies contain mostly solid scientific aspects which can be
treated as white boxes only by a fine elite is not so contradictory with their capacity to have
a wide broadcasting. Simply, from step to step, the message changes its shape, because the
broadcasting of ideologies is not a mechanical process. It is on the contrary the fact of actors
and intermediaries who, naturally, adapt the translation of the message to their public like
they perceive it. It is why the most rustic ideologies have also generally a scientific origin”
(Raymond, p. 290).
As synthesis, it is possible to say that ideology is not a state but a process where the
ideological identification operates by simplification and repetition (incantation in a way).
By referring to Ric|ur (1997) it is possible to discuss the concept of ideology. Paul Ricœur
perceives it in relation with that of utopia, ideology and utopia being both the products of so-
cial and cultural imagination. Imagination is used as operator as far as, at the same moment,
it deforms reality but it also structures our relation to the world. Deformation of realities con-
stitutes its negative aspect and the structuration of the relation to the world the positive aspect.
It is why we are not so far from the concepts of image, metaphor and shape as represen-
tations in their vocation to offer a understanding of what is organization, market, customer
and of the situation where ideology serves clearly as a frame to explain social interactions.
Paul Ricœur questions the association of ideology and utopia in relation with the concept
of illusion by explaining how each of them are built around symbolic structures and, I would
add also, the vocation of a justifiable ideology or utopia “to create” the reality as it was
quoted higher. The ideology is related to the concept of representation, as a kind of invisible
mask coming to base a representation which will strengthen it.
Quite as other sociologists, Pierre Bourdieu (Bourdieu, 1994) offers a frame in the same
way we have already qualified of “sociologization” of the concept of ideology. He speaks
about an universe where agents are not seen, at first, as conscious subjects but as ‘active’
agents and influenced by a professionalism, with an acquired system of preferences and
capacities of perception. The behavior of these agents can be explained in reference to

rationality even if there is no rational explicit and conscious calculation like with an homo
economicus. At a given moment, there is a “relation between social positions (relational
concept), the positions (or the habitus) and the choices with which social agents operate.”
In other words, “families are life bodies with of a sort of conatus in Spinoza’s sense, that is
a tendency to be social with all their powers and their privileges. It is what constitutes the
principle of the strategies of reproduction.”
It is indeed the position in the social fields that influences the vision of the world, the
habits. This habitus, kind of structure ‘incorporated’ into the agent, influences its choices
and its strategies and consolidates its position in the “objective” structure of the institutions
of a society. It will be, for example, the case of school. So that, in numerous “social fields,”
the submission to the ‘general interest’ is the best mean used to defend its own interest
(e.g. the bureaucracy, the family, etc.). The relations of domination are then the support
of a symbolic violence. For Pierre Bourdieu, sociology is an instrument of knowledge to
question imaginary rights and allows to conquer the freedom by the knowledge of what
constitutes the social determinism. The term of doxa often comes back in his work. It
synthetizes the dominant position that imposes itself upon all as a universal point of view. If
there were confrontations to create that point of view, they are taken away and buried in the
unconscious. Indeed, “the thinkers leave to the ‘unthink’ state the presuppositions of their
thought, that is the social conditions of possibility from the scholastic point of view, which
are acquired through a school experience or scholastic, often registered in the continuation
of a native experience (as a member of the bourgeoisie) of distance to the world and on the
urgencies of the necessity.”
To understand, it is necessary to criticize the theoretical point of view which neutralizes
the interests and the practical stakes. The visible strategies of conformation recognize the
rule. The doxa is here to grant what it is asked for the acceptance of the expected repre-
sentation. And the group rewards this submission, real or fictitious, of the ‘self’ in ‘we.’ It
is then possible to consider as an universal anthropological law the existence of “profits of
universalization.”
More than with other authors, it is possible to see here the slender border between le-
gitimization (a process) and legitimacy (a result). But it is already possible to put in motto
a concept allowing the passage between these two aspects by referring to imitation which
belongs at the same time to the individual order and to the socio-political order. The mimetic
behavior results from a choice slanted by the glance concerned things, slanted choice and
contributing behavior both necessary in the construction of an ideology.
It is by underlining how much writing on ideology is difficult because of the arbitrary in
the definition that Jean Baechler (Baechler, 1976) helps us to indicate the outlines of the
concept ideology. Jean Baechler will build his developments in parallel with the concept
of freedom. Jean Baechler indicates us indeed that freedom is opposed to oppression, the
oppression being the mark of a non-choice, or the submission to an outside necessity. But
freedom is also opposed to pressure, and suggests that the meeting with another will develop
without justifiable obedience. The freedom is finally opposed to the subjection which is the
impossibility imposed to take part in the decisions which concern himself. These three
aspects can be connected or dissociated but they show the subtle outlines for whom who
wants to be interested by the question freedom and this of ideology.
The nature of ideology is, for him, that of a speech which tends to generate values which
are used as references in the exercise of power in a society. It is a process of transformation
of passions into values. The dimension he gives to ideology is fundamentally related with
Politics, and let us underline with him that “an ideology is neither true nor false, it can be
only effective or ineffective, coherent or inconsistent” (Baechler, 1976, p. 61). But it is also
metaphysical because the author says us that ideology allows to transform passions into
values. He also ask us the question to know what is an “individual value.”
Ideology fills several functions:
– The reunification, the gratitude given to the actors of the same universe of thought.
– The justification of its faiths which allows to draw the outlines of a group of opponents
and that of the partisans.
– The buckle of interests, in particular those of the dominant class.
– The choices proposed to the partisans, what establishes, in a pluralistic political societies,
the frame of a representation; as such, ideology does not only concern the values but
also the purposes.
– The field of the perception by simplifying the data because it allows to manipulate
“totalities” and to have a position on the future.
He will then analyze the ideological demand with the following categories:
– The global demand of ideology which depends on the degree of consensus which reigns
in the society (the weaker this degree is, the higher the demand of ideology is), of the
intensity of the political conflicts (the more numerous the choices are and the stronger
the ideological demand is).
– The groups characteristics make Jean Baechler to propose criticisms of contingencies
like the age (the demand of ideology would decrease with age), the education level
(which, increasing the doubts, increases the demand of ideology), the social positions
(which ends on the interests of the dominant class, and to the contesting of this one by the
“weakers”), the gender (where men, in Western societies, are in position of domination
in the public sphere).
– The individual demand depends on psychological characteristics.
After the demand, Jean Baechler invites us to examine the ideological supply:
– The ideological raw material is constituted by the myth, the religion, the habits, Ethics,
the rational propositions which are advanced but ideology is (if we follow the metaphor
proposed by the author) the parasite who is nourishing and corrupting these elements.
– The product of the “parasitage” is of symbolic and discursive order.
– The producers are intellectuals whose influence depends of the more or less consistency
of the society (in front of the State).
He underlines that ideology, produced by intellectuals, consists of a rational speech being
able to appear as scientific and motivated by passions. Passions and values are the beginning
and the end of ideology and determine its main lines. Jean Baechler draws us a panorama
of passions in their vocation to be made of ideology. It is here that we find the pursuit of
freedom he quoted at the beginning of his book in the drift of its excessive forms. ‘The
plurality of choices finds its limit in the anomie, the autonomy in the anarchy and the
association in the formalism or the militancy’ (Baechler, 1976, p. 206). A non-ideological

expression is, for example, the technical expertise developed on the basis of efficiency but
the ideological expression is the prometheism (project of the technical mastery of the world),
the epimetheism (project of the criticism of the dangers and the limits of the technique), as
well as the scientism and its reaction, the spiritualism.
The ideological systems develop from a great number of passions and are the basis for a
question and two aspects:
– Fundamental question which, for Jean Baechler, is that of the Bad where he distinguishes
the dualist position of liberalism (the individual is the place of the choice of the Good
and the Bad), monistic positions (which are represented by socialism, nationalism and
fascism).
– The phagocytoses which characterize the fact that ideologies tend to absorb the non-
ideological speeches, in particular the mythologies but also the habits.
– The ideological proliferation which is coming from a principle qualified as doctrinal
development (ideological answers given to all possible questions) and from the principle
of the heresy which consists in seizing an element of a doctrine and to develop it by
being unaware of the context. The heresy means “difference of opinion.” It threatens the
unanimity which constitutes the body of the main doctrine. It is often qualified in the
words with the suffix “ism”: parliamentarism, regionalism, liberalism, etc.
Jean Baechler invites us then to examine the case of the ideological consumption. He
indicates the difficulty in proposing general rules of validity appropriate to explain the
consumption of ideology by such or such category. It can involve a “civilization,” a society,
a group or an individual. The choice “to consume” such or such ideology finds some
existence in a plurality which is always guaranteed at the level of the civilization and of the
society, but not necessarily at the level of the group or of individual. The proposed choice can
express a wide difference, in particular towards the choice of others (oppositions to relatives,
leaders, etc.). Jean Baechler also quotes the possibility of expressing an ideological choice
by retaining only a specific aspect. “Any ideology is liable to a hard or soft definition, with
all the intermediaries” (Baechler, 1976, p. 315).
But the choices of societies and civilizations are wider if we quote two characteristic ele-
ments of ideology, the core, as a permanent vocation, developed around a sublimated passion
and the developments around the core, the game of both developments are conducting to
multiply the concrete forms. Jean Baechler invites us at a look on the religious criterion
(Catholics and Protestant for the Western countries) with the weberian filiation which con-
nects Protestantism, economic liberalism and secularization of the religious thought and
disillusionment of the world.
Jean Baechler invites us also to think in terms of chances of ideologies in their vocation
to be found as pleasant, which is coherent with his thesis built on passions. He underlines
the relations between liberalism and legitimacy of the principle of pleasure. The efficiency
of ideologies arises from the tripartition which is established between passions, interests
and representations.
Ideology ends on a process of organization of “silly” thing (seen as the limitation of the
capacity to seize the truth). In this sense, ideology is a gradual perversion of the knowledge.
More than the concept of culture, ideology seems valid to deal with the question of values
because it is characterized by the double dimension of prescription and evaluation consid-
ered as coming from the same glance. In companies where agents, at the same moment,
prescribe and estimate their employees as well as their customers, the ideological project
very important.
2.4. Beyond the rationality: the beliefs and the irrational?
Ideology allows to include the beliefs and the irrational apparently in the most rational
forms. According to Jürgen Habermas’ theses, what is institutional exceeds the legality and
legal shapes and contains also symbolic mediations which are important to be integrated in
the analysis of representations.
For Jürgen Habermas, to take into account connections of powers and constraints but
also knowledge and faiths is important. The theory of the society should be at the same
time objective and subjective. In that way, the social link is an integration in the system
independently of any critical consciousness and sociality is seen as an integration of a set
of representations of the world.
To understand sociality, it is necessary to confront us to a praxeology (theory of action)
and an epistemology (theory of knowledge). For Jürgen Habermas, the ‘communicational
acting’ holds that place: praxeology then freed from the risks of the ideological drift and epis-
temology because it allows the development of a discussed knowledge. Jürgen Habermas
proposes a foundation of the performative (in the action) linked with universal appropriated
principles “freed” from ideology. The capitalist system favored, in that sense, a logic of
cognitive action—instrumental—by the promotion of the success of companies. But the
“techno-science,” which is the instrument of this success, privileges the logic of the appli-
cation under constraints of the technique instead of emphasizing a method which would
consist in making conscious choices.
His theory of action is based on four modes:
– Teleology where the actor pursues an end defined in advance.
– Axiology where the behavior is governed by standards.
– Dramaturgy where it is in question to propose a certain image.
– Communicational acting where the construction of a consensus results from a dialogue
between agents.
In that last case, intersubjectivity is important because it establishes a posture where the
formal pragmatic consists in doing the first step by developing an argumentation. Com-
municational acting constitutes then the base of social integration because it allows the
construction of a world lived by social groups. The political consequence of its lack is the
replacement of the discussion by the domination of a group by another one (ideology). For
him, the theoretical discourse also belongs to the communicational acting.
In Technique and science as ideology, both entities have to be perceived as inextricable.
The technique and the science are presented as the only great adventure of the modern
society. They sweep all the former metaphysical, religious, moral values and open the
new era of ideologies seen as situations in which any violence is replaced by benefits.
Jürgen Habermas questions the cumulative aspect of the scientific progress in the name of
a social theory which takes into account the modifications brought by science. It brought
neither intellectual progress, nor moral progress. The technicization of science ended with
a “scientifization” of life in an always wider social complexity with the intervention of
the State bodies in a programmatic position coming to fix a frame. This induces Jürgen
Habermas to propose a revision of the labor value to take into account the intellectual
work and he analyses the power of the technocracy connected with science and technique
as a domination. Weber (1971) in Economy and Society invited us to a similar analysis
when he advanced the notion of legal domination and its pure type, “the administrative and
bureaucratic management.”
For his part, Jürgen Habermas puts in evidence both possible reactions: the “left” one or
the “liberal” one with the myth of the golden age and the “right” one or the conservative
one with man—machines systems where the machine has the upper hand. Both reactions
build the generalization of a technocratic ideology in front of which Jürgen Habermas
proposes alternate models as, on one hand, the decisionist model based on the weberian
distinction scientist—politician where politicians keep the attributes of the decision, where
the rationalization collides with the decision-making process, as a residual logic in a sense,
and the procedural rationality with the pragmatic model based on mutual adaptation for the
couple political decision—scientifico-technical reason. In this last case, politic is the place
of mediation between the values of the tradition and the possibilities of the science. But the
positive reason appeared and developed from the second half of the XIXth century on the
basis of a causalist and antidogmatic knowledge.
2.5. Criticisms of Jürgen Habermas’s position and the return to Paul Ricœur
With Jürgen Habermas, in any knowledge are interests and, among these, interest for con-
trol and manipulation, object of empirical sciences. But let us remind here Alain Caillé’s
comments on the current legitimacy of the utilitarian reason and the reference he made to
Karl Otto Apel and to Jürgen Habermas (Caillé, 1989). ‘A community is, they say us, a
communicational ideal, governed by the only Ethics of communication and not perturbed
by the search for power. In such a community, within which each would be invited to clar-
ify and to defend in front of every possible opponent, the principle of its action, it would
form and would demonstrate at the same moment the ultimate foundation of any rational
comment and any moral comment. The proposed solution of the enigma of Reason leaves
perplexed. It presupposes, indeed, that all the principles of action are reducible in the com-
mon denominator of the discursive Reason and that any thought becomes identified with
this one. Now, we do not see too much what would have to say in the communicational
community Guayakis or Nuers, mystics who chose the way of silence, or, more simply, all
those who were not at schools. There are strong chances that at the court of Reason they
would be sentenced in absentia.’ Indeed, Jürgen Habermas connects an anthropological
concept, the concept of interest, with an epistemological concept, the concept of knowledge
and it is a connection made of both which allows to enlighten the concept of interest. And
Jürgen Habermas to underline that the perception of labor is difficult when it is reduced,
as Karl Marx did it, in an instrumental activity independent from the traditional and in-
stitutional context, that build standards and ideals allowing the communicational acting.
Ideology plays here an essential role in the way it conditions the communicational activity
and the instrumental activity and, with this position, Jürgen Habermas escapes partially
Alain Caillé’s criticism when he underlines how much the contemporary representation
of interest consists in reducing everything at a purely technical interest and in subjecting
the interest of communication to the technique of communication as the interest did it for
knowledge.
It is because of that reduction that Paul Ricœur introduced the utopia: the utopia of Jürgen
Hamermas’ communication would work as a representation allowing to avoid the exclu-
sivism of the instrumental rationality. The instrumental reason cannot explain everything or
offer sense. In other words, the criticism of ideology made by Jürgen Habermas is built on
the utopia of a communication without constraint. It is also the case with organizations, their
utopia of a company dedicated to customers, that of the values addressed to shareholders
and that of the transparency carried by accounting systems.
For Paul Ricœur, utopia comes to offer the frame of judgment of an ideology: “It is always
from the point of view of the rising utopia that it is possible to speak about a dying ideology.
It is the conflict and the crossing of the ideology and the utopia that give to each of them
all their sense” (Ric|ur, 1997). In both cases, he refers to Karl Mannheim who underlined
that ideology and utopia have in common to be in discord with the reality but that ideology
defends the established order (and contributes to consolidate its legitimacy) when utopia
disputes it. It would always be in the name of an utopia that it would be possible to criticize
an ideology. The utopia would allow to reveal what seems to be obvious in an ideology. It
is because it expresses something strange who can moreover seem fanciful that it allows to
have doubts on the representation congealed by an ideology. Karl Mannheim fights those
who are delighted by the end of the utopias.
But it is also as difficult to escape from ideology as from utopia. Both reveal the importance
of the imagination and its pathological power. In a double movement between ideology and
utopia, the ideological representations allow to judge pathologies of the utopia and the
positions of the utopia allow to reduce the rigidity of the ideology.
It is on such an epistemological position that it is possible to base postures which allow
to speak about the company, the market or the organization and to base the principles of
justification of its political modes. It is not a question here of dedicating itself in a shortcut
which would make of the company or the organization a new shape of totalitarianism. The
situation is more subtle than it appears. We could formulate the organization as being a
“totalitarianism with a human face,” which means an universe of constraints and voluntary
submission but in an ever fragile ideological universe.
The exit for understanding could be then found in the metaphor of “attractor,” used to
underline the empathetic aspect of the ideological perspective. Ideology can be seen as an
“attractor” inheriting three constituents of ideology: the one that arises from the political
reading of the concept where ideology is a passage ‘in force,’ the one that arises from the
sociological reading for which the ideology is legitimization and passage “in justice,” the
one that arises from the psychological reading where the ideology is conformity and passage
‘in imitation.’
Ideology as an attractor finally raises the question of the “ultimate references,” reference
at the same moment of social and cultural order so that ideology and culture do “system”
together. That is why we suggest here by trying to reach the “fundamentals,” that these
elements would allow us to explain how we think and to see how these fundamentals
constitute permanent elements susceptible to offer a better understanding of the “managerial

situations,” which are essentially variable and escaping situations.
3. Back to corporate governance
The exercise of a ‘democracy of the private property‘ is apparently simple: the share-
holders in general assembly elect the administrators who elect their President who appoints
the executives. The dissociation between owners and executives is lawful, the first ones
being able, in theory, to revoke the second without limit. That is why the Incorporated com-
pany is the frame of a real government which ‘mechanism’ as been qualified of ‘corporate
governance.’ Gérard Charreaux (Charreaux, 1997) defines corporate governance as ‘all the
organizational mechanisms which have the effect of bounding the powers and of influenc-
ing the decisions of the managers, in other words, the mechanisms which ‘govern’ their
behavior and define their discretionary space.’ Corporate governance and its attributes (and
accounting systems belong to these attributes) has to be connoted as positive . . .
The apparently clear principles of the company law would not avoid problems between
shareholders and executives, these last ones being, at the same time, employees. It would
be, for example, the case with executive wages, as far as executives would largely fix their
amounts and their attributes and, because of a so-called ‘lack of control,’ it is possible
to accuse them of optimizing their wages the highest as possible (despite the fact that
administrators could have clear information on this situation) because of their ‘amorality.’
It is as if administrators ‘discover’ these amounts . . . A solution would exist with the
indexation of variable part of their wages with “stock options,” by interesting executives
in the valuation of their shares by paying partly them with shares. But it is also time for
arguing how these ‘visible’ executives could appear as ugly especially when they exploit
these ‘poor’ shareholders (suddenly becoming moral). This ideological issue is clear because
main shareholders and executives belong to the same social class—the bourgeoisie—but
hidden by a discourse on conflicts, efficiency and ‘shareholdism.’ It is possible to speak
about a “simplist determinism” (Pigé, 2002) in front of these arguments . . . and also from
an ‘academic capitalism’ if we give a look to the numerous useless studies made on the
question . . .
It is immediately possible to speak of a more common interest between these two kind
of actors because the main part of them (administrators of executives) have obtained these
positions inside a subtle social game with a simulated importance given to expertise. Ex-
ecutives mainly have to acquire this expertise in conventional MBA’s program which are
made for this, with a subtle hierarchy between them. But they also have to be born at very
specific places to become administrator or executive.
And the question of corporate power is wider because it concerns also mainly the ‘forgot-
ten’ relations between executives and other employees which is, in fact, human resources
management . . . by forgetting this resource . . .
The information given to shareholders raises also questions related with the publication
of accounts in their relations with financial markets, banks, employees and their representa-
tives, actors hidden today behind the vocable of ‘stakeholders.’ These ‘stakeholders’ would
have to wear the clothes of a shareholders activism to have the best chances to be heard, be-
cause of this so moral game of corporate governance. The management of this information
is now seen as one of the key objects of managerial power within a company. Beyond the
officiality given to accounts, there are some possible interrogations on the principles of a
social game established between executives, members of boards and the accounting profes-
sion (including internal controllers) because of the crucial importance of the information
given to the financial analysts. Finally, it also raises the question of the legitimacy given to
the company as a central institution in our societies and that of the dominant ideology of
financial markets. With the theme of corporate governance and its evaluation systems, it is
also question of the relations established with other ‘stakeholders’ like customers, suppliers
and local communities. This is why we could speak here of an evaluation system instead
of an accounting system because the accounts are not only the production of an accounting
profession but also that of a whole system, accounting having gained its legitimacy in a
‘technicism’ by playing the role of a transparent appearance despite its hermetism. It is also
why an ‘accountabilization,’ new kind of ideology which legitimates the fact that everything
has to be reported in accountable forms, even in hospitals or municipalities, for example,
has developed. But this ‘accountabilization’ is far to be neutral for it allows privatization
because of financial evaluations made in an ‘accountable’ form.
If the rules of the company laws seemed to be the frame for relations between shareholders
and executives, it is without taking into account four elements:
– The possible confusion between the status of shareholders, administrators, Chairman
of the Board and Chief Executive Officers, confusion which organizes the outlines of
a capitalism where shareholders should wish to manage their company but without
regarding the position of “radical initiates” which is that of administrators and chief
executive officers.
– The absenteeism of “small” shareholders during general assemblies which distort the
principle “a share—a vote” because they do not vote or, in the best cases, they send an
open vote to the members of the board or to the intermediaries who keep their shares
(mostly financial institutions) which are in fact also other important hidden members of
this game.
– The ‘financiarization’ of shareholders, whose representatives do not really try to exercise
control but want to optimize financial investments on the basis of clear profit policies
which seem them appropriate if they look unrisky by planning a short and easy return
on investment.
– The construction of a network of administrators—Chairmen of Boards and executives
and the social game which binds them.
But the history of corporate governance is rather ‘heavy.’ First World War has been
cartooned as a war of ‘gunmakers,’ especially if we remember that three among the four
European dynasties (Habsbourg, Hohenzollern and Romanov) have disappeared in 1918,
despite the fact that they were taken as powerful dynasties. But we can be sure that these
‘gunmakers’ were considerably enriched after World War I. After was the crisis of 1929
and then the Second World War and the suspicion on the political power of important
shareholders within these companies. The shareholding system stemming from these clans
was made responsible of these two wars. It is enough to remind the collusion between Krupp
and the nazis leaders in Germany. But the suspicion was also extended to the individual as
shareholders, seen as avid persons, focused on easy earnings because of their expectations
(and their greed) like in the United States between 1919 and 1929. These facts have induced
a power given to ‘institutional investors’ after 1945. It is, for example, the case in France
where the rules of financial investment applied to legal reserves made by nationalized
insurance companies were fixed and controlled by public officers belonging to the State
Finance Department. They had no real need for a sophisticated accounting but for clear
fixed rules, far from the ‘fuzzy’ accounting principles of today. And the long inflationary
period (from 1945 till 1980) has also induced the destruction of financial revenues like
dividends because the average interest rates were lower than the average inflation rates. But
this situation was correlative with ‘stimulated’ growth rates in Western countries.
The collusion between executives, Chairmen of Boards with the leaders of the fascist
regimes before and during the Second World War (Japanese imperialists, Italian Fascists
and German National Socialists but also fascists of the regimes installed because of the
collaboration during the German and Japanese wars of conquest or even in the US where
some important entrepreneurs had an admiration for Hitler) poured discredit on this type of
financial capitalism. This aspect has ended, under the request of authorities of American oc-
cupying armies, with a reform of the modes of shareholders representation in Germany, for
example, where another structure with a Directory Board and a Supervisory Board (where
employees representatives could have seats) was substituted to the ‘classic’ structure (‘share-
holders general assembly—administrators—Chairman of the Board being at the same time
Chief Executive Officer’ qualified as Führerprinzip). This modality has founded of the Ger-
man ‘collaborative management.’ Legally introduced in European Union in parallel with
the classic structure, it had a very relative broadcasting and a rather formal functioning till
the 1980s. The Incorporated company is in fact not really the place for political consid-
erations and this evidence will cover with a thick lead screed the political “impensé” of a
possible political role of companies despite a considerable ascent of the political power of
big companies with the multinationalization of their activity since the 1950s.
1980 is an important break with the come back of an ideology of financial revenues
in correlation with a situation of average rates of interests superior to inflation rates, i.e.
structural positive financial surplus. But these financial revenues are built on a ‘new’ social
game connected with the emergence of a ‘mutualist’ capitalism (of ‘mutual’ investment
funds such as pension funds) giving the impression that everybody could win at this game.
Capitalism would have become a ‘win–win’ game. We know that some have won a lot
but remained mostly ‘hidden,’ some win less and a huge part of our societies has lost
especially if we give a look at ‘poor’ categories in rich countries or moreover at ‘poor’
countries. Perhaps was it the duty devoted to accounting to give information founding
the arguments of a ‘win–win’ system by over-evaluating everything, especially shadows
. . . when accounting of intangibles has been introduced. This accounting of intangibles
accompanied the increasing importance of what has been called later a ‘new economy’
which was also the place of the most important scandals. By taking the argument that, with
‘new’ information technologies, a ‘new’ kind of business was developing, accounting of
intangibles gave (and is still giving—through the argument of a knowledge management
today) value to ‘shadows,’ allowing a financial speculation on them (with the so-called
‘Internet bubble’). Here again, where are the agents who won at this game? Is Microsoft a
monopol? Accounting data remain silent on these aspects . . .
But motivations of these “mutual” funds differ also from what was existing before. These
funds invest in companies shares for a stable and continuous financial return on investment
and they also tend to operate their shareholder’s rights. It is possible to indicate, in a
premonitory way, Ralf Nader’s consumerism which had already seized the opportunities of
an ‘activist capitalism’ by calling Administrators and presidents of Boards during general
assemblies to address criticisms for products and services sold to consumers.
The privatization will finally offer a considerable extension of the field of intervention
of companies in societies, privatization taking the shape of a sale of shares created for the
occasion ‘to put on the market’ compartments of public activities. Let us remark here that
privatization appear to be a ‘win–win’ game for States by decreasing their public expenses
(because of the sold activities) while increasing, at the same time, their income by sale . . .
It will also induce an extension of the social game of corporate governance.
But the management focused on financial surplus makes that the shareholder value has
become today the key managerial indicator of performance, giving to financial account-
ing a supremacy on any other information system. The representatives of this mutualist
capitalism used the opportunities offered by the game of the shareholders representation—
interpellations during general assemblies of shareholders, presence and actual game of con-
trol during meetings of administrators to ask questions for clarification about the positions
taken by the Chairman of the Board in front of the executives, and to remind the exposition
of this Chairman to his legal responsibilities . . . and his ‘class’ responsibilities—to defend
policies devoted to the development of the level of the shareholder value.
It is also necessary to mention, on behalf of some investment funds, perspectives of po-
litical order with, for example, the apparition of “green” investment funds which are going
to choose big companies shares having an activity with ecological concerns or involved in
operations of sustainable development and in companies with ‘irreproachable’ ecological
behavior. It is still the case with ‘ethical’ funds which, in reference to a values system, are
going to operate in coherence with this system to buy shares. It will be sometimes heavy of
consequences (with, e.g. Roussel-UCLAF which preferred to abandon the manufacturing
and the marketing of the abortive pill rather than to be confronted with the activism of
these funds). It will also induce a sophistication of the ‘accounting game.’ Companies have
now to produce environmental reports annexed to shareholders’ reports or, in a broader
sense, ‘stakeholders’ reports’ where shareholders’ report could be annexed (or remain in-
dependent). The ‘accountability’ principle is then going to produce ‘an accounting without
accountants’ where standards and certifications exist but largely outside the classical game
of accounting despite the fact that it looks like ‘classical’ accounting.
It is in this context that the question of the information given to shareholders and their
representatives belonging to the board of directors takes a new importance. In relation
with the maximization of shareholder’s value, the publicity given to accounts has induced
to question the auditors about the reliability of their audits because it is a question of
guaranteeing the real representativeness of the accounting figures. The lack of reliability
would destroy any legitimacy of this shareholder’s value. It is also question of guaranteeing
the conditions of preservation of the potential of the company translated by the accounts. It
is also question to build a ‘true and fair view’ through several accounting images. This can
be made only in connection with the internal reliability of control mechanisms. It is why the
auditors have acquired an increasing glance on the functioning of the company to perform
their mission and then, a new importance. The practices of the auditors interfere also with
the procedures and the internal objectives to the company. These aspects have seemed to
be strong enough to avoid ‘slides’ in accounting figures but they did not operate, in fact, as
far as we see it with scandals like Enron, Worldcom, Vivendi Universal, etc. and perhaps
with the future ‘environmental’ or ‘societal’ scandals . . . in contradiction with the images
related by stakeholders’ reports as it has already begun with Nike.
These practices have become more crucial when operations of mergers—acquisition
multiply, either in a voluntary way, or by hostile operation of purchase and also because
scandals in major financial institutions has occurred, coming to throw the suspicion on
the reliability of the certifications which were made of their accounts. Numerous financial
institutions of international size and situated in various countries (American Savings Banks
in the US, Credit Lyonnais in France, Barings in Great Britain, big banks in Japan, etc.)
have failed while audit reports had been signed as well as their performances were certified.
It is now the case with Enron, Worldcom, Vivendi, etc.
A synthesis of the arguments about the rise of corporate governance has been made in
the document Corporate Governance: a synthesis of the literature (Véronique et al.) but
they can be read also as pure ideological arguments in favor of this ‘new’ way of living with
capitalism:
– the difficulty for controlling the performance of executives because of a social game
which may bring confusion between the position they occupy with that of administrator,
which legitimates a broader use of accounting shapes;
– the ambiguity of the role of administrators who, always in reference to this social game,
hesitate between the defence of the interests of the company, that of the executives and
that of the shareholders;
– the strategies of nomination of the administrators which has to induce their control to a
more limited one, that of their clan, which legitimates the discussion about the increasing
importance which has to be given to ‘independent’ administrators;
– the competencies and the independence of administrators who are far from being ac-
quired;
– the weak implication of administrators in their task of control;
– representatives’ “potiches” appointed there for their fame.
The common answer given to these arguments has always been the same: always more of
the same thing—more ‘independent‘ administrators, more ‘certified‘ accounting . . . That is
also how corporate governance has, little by little, induced the notion of ‘global governance‘.
But it is also possible to open a discussion on the status of the corporate governance
because of the adoption of the American model proposed (or ‘imposed‘) by the so-called
‘globalization.’ It means privileging the classic form of the Incorporated company flanked
by ad hoc supervisory committees and the correlative procedures.
The financial analysts, new profession which was developed around financial market
places (mainly American), has the objective to give an interpretation of the companies po-
tentials, regarding mainly their ‘published’ accounts in shareholders as well as stakeholders
reports today. These analysts belong, for example, to companies specialized in scoring, their
scores being used to define coefficients of reputation or of risk which, for risk, will weigh
down or up the interest rates applicable to the loans. It is a real power of influence on the
fame of a company, without counterpart or verification or possible discussion, on the basis

of culturally connoted criteria. Making all the forms of corporate governance homogeneous
has become important, even for public institutions and States which have to be “transparent”
on this so perfect ‘accountable’ way. Let us quote there that the Anglo-Saxon countries and
mainly United States are characterized, economically, by a more important place given
to financial markets and politically by a more important place given to communities. Not
surprising that this situation is in favor of the Anglo-Saxon modalities of corporate gover-
nance and accounting systems. In fact, American evaluation systems are now instruments
of governance nevertheless the cultural specificities of the American world.
It is the case, for example, with codes of ethics. The existence of such codes belong to
the ‘positive’ aspects of scores. In a mostly mimetic way, European companies adopted
such codes but for formal reasons. The disappointment was moreover very important in the
subsidiaries of American companies installed in Europe when they translated their codes
into ‘local’ languages and when they tried to animate the procedures connected with these
codes. Resistance appeared because of some items of this codes (whistle blowing, e.g. in
France and Germany).
What is in question with corporate governance is the question of the power of main
shareholders between them, between privileged shareholders and executives, the control of
the executives by the exercise of a theoretical corporate governance with rules and principles
being in fact only an appearance.
3.1. The development of the weight of financial markets its impact on corporate
governance
The development of a dominant ideology for the practices associated to the increasing
weight of financial markets plays a crucial role for developing pensions funds: preference
is now given to the regimes of capitalization on the regimes of repartition. Let us note its
implications in terms of corporate governance: from a State control, heir of the Welfare State
which has organized in France or in Germany, for example, a collaborative management
employers—trade-unions—State, this new situation gives a legitimization to the power de-
voted to investment funds, power which requires the organization of a corporate governance
because the way of exercising power in Incorporated companies should take into account
the officialization of the political power given to these investment funds.
The financial logic appears as a new kind of solidarity between generations. Indeed, if
the passage from the regime of repartition to the regime of capitalization changes nothing in
terms of macroeconomic impact and ceteris paribus in social justice, it changes the nature
of the control of and in the company and this comes to justify, for example, the reference
to the shareholder value as key reference . . . and a new importance given to accounting
systems which has also become a political object.
This evolution is in fact a real corpus of government. It proposes the evolvement of
a political power to a technostructure, that of the administrators and the auditors, on the
basis of the legitimacy of the expertise (without preservation of a space of consideration
other than this which is organized around the criteria of the expertise). The standards of
the experts tend to be substituted to the laws. These standards also concern the function of
Chairman of the Board which should not be occupied by the Chief Executive Officer, the
board of administrators which should have at least three ‘independent’ administrators whose
independence is insured by appropriate modes of appointment, administrators who could
surround themselves with experts, with specialized committees that should be created—
audit, wages . . . The administrators should guarantee the efficiency of an internal control.
But this frame is now in crisis because of several bankruptcies (Enron, Worldcom, etc.).
These principles of governance will not only give to the accounting profession the role of
a legitimate expert but also a role in the internal control, the management control and more
globally the control and on management in companies because the accounting profession
works with standards and procedures. It is this substitution of laws by standards and pro-
cedures that allows to establish, for example, a continuum between programs of massive
reduction of costs, management focused on ‘values’ brought to customers and the confronta-
tion with a Business Ethics based on procedures, in the name of a ‘sustainable’ position of
the profitability. Not surprising then to see also the emergence, at the same time, of the theme
of a corporate citizenship to justify this political dimension and the communication on acts
others than those that are operated in the strict financial logic but in the American dimension
of this logic which privileges the cultural context of this country where communities are
legitimate. This concept is not applicable without serious precautions to other countries.
It is, for example, the case for the Codes of Ethics recommended by the American Law
Institute and whose presence leads to conflicts with judges in other countries. In France, for
example, the reference to a Code of Ethics and a demonstration that ethical procedures are
implemented leads, in no way, to the leniency of judges. The expensive efforts displayed
by companies are then made in pure loss, because this type of management collides with
a cultural impermeability. Ethics don’t pay! Always in an American way, these applicable
codes of conducts in the company are made to build a safety for administrators if they would
be sent before courts. Nobody would see French judges operating on such criteria today if
they were invited to do it in a frame other than a legal frame.
Let us be interested more specifically in the contents of the competencies and the inde-
pendence of administrators. It is a question at first of reaffirming the superiority of financial
objectives as key obligations for the upper management and also to assert the legitimacy
of the company on a financial logic. The consequences of this attitude pass through an
evaluation of the efficiency of the systems of internal control, with an integration of the
roles of the bookkeeper and of the management controller in their relations with accounting
systems.
It is, at the same time, a clear superiority given to the shareholder value, because of the
necessity of guaranteeing the pereniallity of the company as a vector of profit beyond the
presentation of certified accounts. The administrators are authorized to appreciate the coher-
ence of the visions of the management in connection with the objective data of the situation,
data produced by accounting systems. They should have wide means of investigation. The
political legitimacy of the ‘markets tyranny’ is working as if they act like human beings and
as if they cannot make mistakes or, if they do it, it would be because of their auxiliaries in
terms of information.
The abstract reference is that of a theory of the anticipations which can be considered
as ‘clean’ (a theory of rational anticipations). It means that things should occur as they
are foreseen and that the given information on forecasts is reliable so that the actors can
act according to them. It has been necessary to wait for the Asian financial crisis on the
end of the 1990s to put in perspective the existence of a theory of anticipations which can
be considered as ‘dirty,’ that of the “irrational” anticipations to accept that the actors of
financial markets can behave also as crowds in reference to imitation, panic or fear. This
theory takes us far away from the psychology of a ‘rational economic actor’ who is thought
as having to mobilize all his behavior to maximize its satisfaction (or its profit), psychology
which is that of the homo economicus of the neo-classic economic theory.
The ‘competent and independent’ administrator, realization of this homo economicus
in the board of administrators, fed with certified accounting data (which are not data but
results of sophisticated manipulations) is taken as the legal shape which serves as reference
in this type of governance: a ‘contractual’ of the executives roles by administrators who
can be attended by experts. Contract and expertise are here gathered. We find there two of
the categories of the utilitarian Reason in its concretization today in corporate governance
and its accounting auxiliaries. It is also the realization of what is going to legitimize a
superiority of standard on laws. The professional administrator, appointed by contract and
the independent one, Professor at a University, lawyer, assisted by chartered accountants,
will be the archetype of a capitalism freed of the “common people” unable to understand
the mysteries of a globalized economic system ruled by the principles of the economic
liberalism because a level of expertise would be the entrance ticket of such a situation.
In this context, the standard of an activist position is proposed to shareholders because
of the ‘evidence’ of a globalized world with a political dimension completely independent
from that of States. This position would be accessible with the use of ‘new’ communication
technologies which supply the mean for rational anticipations. The shareholders will be as
well as investment funds (and among them, pension funds) able to acquire, to keep and to
resell their shares in reference to financial performances, real and supposed and in consid-
eration of the ‘politically correct’ image of these companies given by certified accounting
systems. These references are important to achieve a ‘fair’ regulation of the shares values
on financial markets, these last having acquired a political content. It is also what should
establish the focal point of the policies implemented in companies by their executives. The
government of markets overlaps that of the States in the sense of the construction of new
Rome which would have neither emperor nor location. The justice built independently of
States laws, should legitimate this situation.
3.2. The consequences of the superiority given to financial surplus
The key importance given to financial indicators is going to give value to any action taken
to strengthen the profitability and induces a priority given to short-term visions of processes.
In other words, the reference to such indicators induces companies to forget to multiply
reorganizations and external acquisitions which will facilitate the creation of a financial
value instead of managing an internal growth subject to risks because of investments. This
also shapes the horizon of accounting systems.
This reasoning refer to a model of a company mainly seen as profit-maker. The processes
will be valued in terms of productivity and profit creation, as answer to the immediate
demands of the market. This strategy will also induce the stakeholder’s model: the value
brought to customers, the value pulled from suppliers, the value of the staff in its capacity to
appropriate this type of superiority given to the financial values and who will ‘learn’ from
the market, the shareholders who will decide in terms of expected return (in comparison
with an obtained return) are the main part of what is now seen as an ‘intangible asset.’ It is the
search for an efficiency of the capital that is in question the in an approach of the productivity
based on the optimization of resources allocation which will induce the most important
possible reductions of the need in financial working capital by acceleration of all possible
rotations (credits given to customers, other streams, inventories . . . ). The suppliers and the
customers should adjust as fast as possible their credits and their debts and all the technical
supports are used to do it (electronic adjustments transfers, exchange of computerized
data in trading, etc.), the financial intermediaries having only vocation to give credits.
Inventories should be reduced as much as possible (with a “just in time” management, a
modification of the supply chain management). It is also question of increasing productivity
of directly productive structures, the support activities being minimized or externalized
(e.g. the information system of a company by outsourcing). It is such a perspective which
ends on the generalization of the reduction of times in terms of flows and finally, in the
name of shareholder values, on a world of greed as daily horizon for each kind of actors,
facing ‘paradoxical orders’ in a company as far as one asks them at the same moment to
be motivated, to be autonomous and to realize objectives related with increasing financial
ambitions. This ends on a world of ‘cynical issues’ where the actor cannot there act otherwise
than in reference with his individual system of values because he is asked to consider all
these contradictions as normal as well as the superiority given to financial objectives and
because he has to react as fast as possible.
And the actors of companies are confronted with the necessity of managing more and
more productive assets. They are interested in it with the widespread of practices of variable
salaries indexed on their capacity to achieve these objectives. The systems of variable salaries
based on a mode of management in penalties—rewards finds here a new actuality but in a
context where, at the top of the hierarchies, the variable part tends to be only variable. But
this system of salaries by the way of “stock options” has been generalized for categories
much more dependent of the variable part of their salaries for their daily life. Here also,
this modality is source of “cynical individual issues” as far as the variable part leads to
the legitimacy of economic values. It is easy to understand that those who depend of the
variable part of their salary to assure their ‘elementary’ life (housing, transportation, food,
etc.) are ready for everything to keep their position within a company in a world of structural
unemployment or ‘flexible’ (i.e. unstable) job places.
The costs reductions achieve the process, mostly driven by holders of stable jobs and
tend then to a sort of ‘auto-dismissal’ in the name of the creation of financial value. It is
why it is possible to speak of ‘paradoxical orders’ as far as those who organize unstable job
positions will be soon, in turn, filling unstable jobs too. There are some difficulties to be
able to continue to believe in an economic welfare in such conditions. The injustice of the
effects strengthens the ‘cynical issues’ in reference to individual values system: ‘I destroy
the life of the community because I have no choice even if I do not appreciate it.’
This management would induce a reduction of risk and a value for processes most eas-
ily reversible, those that tend to offer the profitability of the shortest way. With quality
management, for example, ‘value analysis’ (which consists in examining a product under
all its sides considering the modalities of its use) has got a renewal of interest. It ends
on a ‘rationalized’ conception of a product but finally also a mimetism among competi-
tors (e.g. at a given moment, all the motorcars of the same category are alike, have the
same technical performances and are sold at the same price). It is also the reference to a
collection of short-term profitability decisions that leads to justify decisions as relocations,
subcontracting, outsourcing activities (the activities which are not considered as being ‘core’
activities—in particular social activities, maintenance, etc.) are given to subcontractors, as
result of a process reengineering. The subcontracting of social activities is also a destruction
of social links.
This conception is also fundamentally normative—a company should get organized ac-
cording to this vision and according to the criticisms addressed to the categories of an eco-
nomic liberalism: auto-reference and confusion between the oikos (place of the economic
activity) and agora (place of the political consideration). Everything has to be managed like
‘capital,’ human capital, fame capital, trust capital, etc.
Shareholder’s position constitutes finally a ‘citizenship of market’ which would have
vocation to be as justifiable as the ‘real’ citizenship and induces the legitimacy given to
reasoning in terms of ‘efficient stakeholders,’ the only criteria of action of and in the com-
pany and in an ‘efficient State.’ Not surprising that those who do not “fit” are logically
excluded. Financial markets are considered as a justifiable reference for managerial action.
The requirements for a financial profitability will substitute themselves to other strategies.
The best scored companies advance today the necessity of creating capital according
to these indicators and it is why accounting systems induce the related ‘technicism’ of
performance measures with such ‘fundamentals.’
The increasing importance given to a financial representation of values has to be connected
with the importance given to the stock-exchange prices as a reference for investment policies
driven by financial funds and, among these, pension funds because of the social legitimacy
of the shareholders. The legitimacy of this reference has become the standard for corporate
governance and executive officers give the example by multiplying ‘road shows’ in front
of financial analysts of various financial places to expose the financial results obtained by
their company and this behavior has modified the contents of his work. It is in fact what
comes to limit their autonomy and what has also modified the rules of the social game
which existed between executives and shareholders. The shareholder value comes to offer
the base of an ideological reasoning as far as it refers to published accounting data instead
of a debate among insiders. The maximization of the shareholder value is a clear managerial
objective which ties a financial ‘external’ logic of financial markets with a ‘internal’ financial
logic of management and induces a focalization on accounting systems whose mimetism
according to ‘General Accepted Accounting Principles’ among companies has become a
sign of relevance.
This shareholder value is supposed to bring a solution to antagonisms like short term/long
term, financial objectives/industrial objectives, high levels of the hierarchy/operational lev-
els. It would induce a better information of the shareholders by the necessity of applying
a principle of ‘transparency’ because it is necessary to give the proofs of a financial value
creation, sign of an optimal capital allocation. This value is not created at random, but re-
sults from a voluntarist process which really constitutes a strategic duty for executives. It is,
for example, the case of Coca Cola and General Electric that are given as examples in this
domain. But Enron was also given as such an example! The successful executives are then
turned into heroes. The role of auditing firms is to certify expected and realized accounts,
taken as representative beyond all the specificities and the hermetisms of the accounting
language.
3.3. The role of auditing firms in the social game of corporate governance
As far as the accounting syntheses come to establish real normative references, auditing
firms are going to play an essential role in the orchestration of this type of communication.
They legitimize there the activities of a chief financial officer, always more involved in the
elaboration of a global strategy as answer to the increasing power of investment funds and
defending the advance of a financial Value Based Management.
The political role of auditing firms is to certify the accounts. They traditionally engage in
this process their legal responsibility, but it is also what tends to give them a new institutional
dimension in the game of a management by values by conferring them a specific role of
‘guard of the temple.’
The auditors verify the application of validated accounting standards. This control, ap-
parently formal, becomes totally institutional as far as the radius of action of the auditors are
extended to the procedures of internal control because of the place which is today made for
them in corporate governance. They are supposed to give the adequate data to control the
executives because of published certified accounts. The game of the accounting standards
and the construction of these standards has then become essential. The accounting standards
are now situated beyond the law with some clashes as it was shown by Enron’s case.
The Anglo-Saxon auditing firms accompanied the American companies during the multi-
nationalization of their activities during the 1950s and the 1960s, these companies having
to publish their accounts according to the American accounting criteria for the New York
Stock Exchange. These auditing firms were the only one being able of play this role. The
increasing weight of multinationals and the diversification of their origin considerably in-
creased the role of these Anglo-Saxon auditing firms. They came to guarantee the accounts
of all multinational companies, one of the signs of the multinationalization being moreover
the quotation of the shares of these companies on several financial markets and, fatally,
the most powerful of them, the American market. This drove to an homogenization of the
international accounting standards on the basis of the respect of American standards. These
standards are supposed to be built to facilitate the federal control on stock-exchange activities
by the Security Exchange Commission (S.E.C.) according to the Federal Accounting Stan-
dard Board (F.A.S.B.) with General Accounting Accepted Principles (G.A.A.P.)—which
has to be understood as if they should be very strictly observed . . . Their evolution depends
of the social game which is established between auditing firms, stock-exchange authorities
and management of big companies. We are there in the presence of a normative source
independent from the law and from any democratic control under the motive of ‘expertise.’
It is this social game which came to base the ascent in power of the American auditing
firms (Arthur Andersen, Ernst and Young, etc.) in front of the challenge of an alternative
normative source with the European directives promulgated today by the European Union.
A place of confrontation (the International Accounting Standard Committee (I.A.S.C.)—
nevertheless exists, under the aegis of the UN). But it is characterized by the fact that it
mostly confirms the American standards, the works of this committee being devoted to the
American auditing firms under the motive of their expertise.
Two consequences appear as the result of this aspect:

– The appearance of a “general store” of accounting standards available for auditing firms.
But they will mostly arbitrage in favor of the American standards. Confronted with the
increasing sophistication of financial titles, the bookkeepers were brought to be creative
and the path is short between the accounting creativity, the smoothing of the results and
the ‘creative’ accounting.
– The increasing reference to auditing firms as “guards of the temple” of the accounting
procedures and more generally all the procedures of control.
Auditing firms were then able to complete their activity of audit by an activity of con-
sulting under the motive of the ‘fiabilization’ of procedures. The accountings are today held
on computers and the lucrative field of consulting in information system was then opened
to the auditing firms. Adequate subsidiaries devoted to consulting were then created.
These firms have in fact elaborated a normalization of big companies management which
operates more or less on the same way today. The extension of their activity also took
place in every country because, after having accompanied the subsidiaries of the American
companies, they began to guarantee the accounts of other multinationals companies, often
by absorption of the most important local auditing firms. At the same time, the 1990s were
characterized by a huge concentration of these firms to the point that it is possible to speak
of a cartel of auditing firms today, so much the number of actors became restricted. But a
cartel always finishes by the behavior of a cartel: implicit or explicit agreement on the level
of the prices, the sharing of the market, the reduction of the offer . . .
The vocation of these firms in the name of their independence and of their expertise, to fix
standards that they are in fact alone to be able to manage also became a phenomenon which
should be underlined. Certainly, it is not a cynically wish they did because it was also neces-
sary to cope with the forms and the practices stemming from the management of a positive
financial revenue, but it is also the case. We are then in front of a situation which could be
compared, in a sense, with that of a political totalitarianism of economic origin. In front of
the disappearance of the countries of the communist block, the democratic countries have
exposed the understanding of their democracy to the principles of an economic liberalism. It
is the case with the construction of norms by the auditing firms beyond the usual legislative
process. Freed from any constraints and in front of opportunities opened by the necessity,
for companies and organizations, to have their accounts certified, these auditing firms com-
plicated the standards to guarantee their certification . . . and their income. Strong of the
political legitimacy they implicitly hold, they contributed then to the emergence of a sort of
‘liberal–bureaucracy’ (which political nature cannot be perceived as being fundamentally
different from that which had been organized in the countries of the communist block).
This ‘liberal–bureaucracy‘ is characterized by actors who emit rules, consuming resources
without real creation of something in return. But the legitimate perception of these rules, in
the name of an economic liberalism, assimilates them to a creation of a ‘positive’ economic
value which can finally be ‘proofed’ with the ‘intangible’ values created by their activities.
These firms ‘decree’ the value creation in reference to standards. And it is what serves as
reference in the social game of the actors of business life today.
Because of the privatization of public utilities, these standards overflow the field of
private companies and have vocation to be applied to all organizations, like public services
which have to be managed according to the criteria of these accounting standards and
corporate governance. Cities, schools, hospitals . . . should publish (according to countries)
‘accounts’ under these accounting forms in the name of the ‘accountability’ principle to
borrow money, even to obtain subsidies. The respect for the accounting forms, by its potential
of structuration in terms of institutional functioning, is considered as a sign of ‘good’
governance. Governments, international entities such as the European Union, the World
Bank, etc. also give these auditing firms missions of control for quota and subsidies uses,
as far as these entities did not develop proper competencies because of a decontented
competency of their general body of public officers in terms of accounting and also because
of their decreasing number. This decontenting is in fact a political choice which has never
been discussed. The auditing firms were then able to advise the application of ad hoc laws
to open the field of business realizations in zones freed from the restrictive rules. What is
the weight of the State of Slovakia or Macedonia in the concert of nations, especially when
their structuralization is guaranteed by the intervention of the consultants of these firms?
The fragility of their youth drives, for example, to missions given to these auditing firms by
the International Monetary Fund. These firms could then advise for tolerant evolutions of
the local laws in relation with their contracts with multinational companies, their powerful
and lucrative customers. And free zones of activities, offshore zones, fiscal paradises were
multiplied since 1980 at the same time as it is possible to justify them—and it is partially
true also—as susceptible to generate an economic activity which is cruelly lacking in these
places.
At the same time, each mandate of certification for the accounts of a multinational com-
pany has become to have a real weigh in their turnover. Loosing such a mandate would mean
a clear loss in their activity while there is less risk with the lucrative activity related with
the subcontracting made with public entities. Because the auditing firms are at the heart of
profit publications and because of their profitable accumulated consulting activities around
this very hot issue, they became, at the same time, dependant of multinational companies
executives. Executives of these companies were then able to make the adequate pressure
. . . The worm is in the fruit . . .
4. Conclusion
Masking the interests of a bourgeoisie to make them invisible through the subterfuge
corporate governance is important. Corporate governance gives the illusion that the rules
of a representative democracy is in action in corporations today. At first, it is necessary
to see that these rules are in fact a pseudo legal construction as far as its categories are
based on standards and not on laws. Standards arise from a social game allowing the
dominant interests to impose their positions on the motive of their expertise. The accounting
systems have no other role that to strengthen the legitimacy of standards instead of laws.
The accounting systems downgrade all that could come from a ‘true’ political debate.
These systems are activated by auditing firms, which themselves build a cartel. Their
interest pass by a ‘managerialization’ of the society. The application of accounting categories
to all institutions in the perspective of an ‘efficient’ State under the motive of transparency
contributes to increase their business.
Furthermore, the application of the accounting categories is a powerful mean to build

a criticism of the viability of the Welfare State devices because the criteria of financial
profitability is read through the accountings standards. The increasing weight of their in-
tervention contributes widely to the institution of a bourgeois State taking all the characters
of a ‘liberal compradore bureaucracy.’
By focusing the attention on conflicts of interests between managers and shareholders,
corporate governance, by founding the possibility of a shareholders activism, induces to
forget the classes conflict especially today when rates of profit are regulated by the number of
employees. The employees, directly or indirectly (through the investment funds and, among
them, pension funds) are invited ‘to forget’ their conditions of exploitation by focusing on
the ‘bottom line,’ even if it is a ‘triple bottom line.’ Their shareholder’s status do not really
mean that they belong to the bourgeoisie. This dilution is contributing to the legitimization of
a bourgeoisie by giving even more importance to private property. Moreover, the bourgeoisie
increases the weight of its power by assigning to the employees the risks of its economic
practices.
It is the same thing with citizens. Corporate governance acts as if there is no more society
(because of the same message sent to citizens and shareholders) but only an ‘economic’
society, the bourgeoisie having masked its interests by flattering the other categories with
the illusion of a democratic expression. Corporate governance allows in fact to mask the
considerable power accumulated by the leaders of multinational companies.
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Critical Perspectives on Accounting 16 (2005) 797–823

Corporate governance and accounting

In this paper, corporate governance is understood as an ideological perspective of the superiority

In a strict sense, corporate governance is concerned by the exercise of power in the

– A criticism of the illusion of rational anticipations considered as founding the behavior

2. Ideology and organization

Before giving an understanding of a political content given to financial markets today in

2.1. The notion of value

2.2. The notion of rule

2.3. About ideology

capacities of perception. The behavior of these agents can be explained in reference to

association in the formalism or the militancy’ (Baechler, 1976, p. 206). A non-ideological

2.4. Beyond the rationality: the beliefs and the irrational?

constitute permanent elements susceptible to offer a better understanding of the “managerial

3. Back to corporate governance

fame of a company, without counterpart or verification or possible discussion, on the basis

3.2. The consequences of the superiority given to financial surplus

Two consequences appear as the result of this aspect:

Furthermore, the application of the accounting categories is a powerful mean to build

Althusser L. Pour Marx. Paris: La Découverte, collection Poche Essais; 1996.

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