Recent upheavals in the capital markets and the wider economy have presented accountants with a number of challenges. Economic downturns and increased competitive pressures have encouraged companies to adopt accounting methods which show their results in the best light, and this has led to increasing emphasis on rule‐making by the accounting profession to maintain the credibility of published accounts. The Accounting Standards Committee, established in 1970 by the professional accounting bodies in the aftermath of the AEI‐GEC takeover battle and the Pergamon‐Leasco affair, encountered increasing problems in gaining acceptance for its accounting standards in recent years and has now been replaced by a better resourced and more independent body, the Accounting Standards Board. In addition to these general difficulties, corporate merger activity and innovative forms of financing have raised serious problems of a technical nature for accountants. These difficulties are all occurring at a time when deregulation of the capital markets has reduced the amount of investment analysis work done by stockbrokers to concentrate on companies in the FT100 index which account for 80% of stock exchange turnover, with consequent neglect of the great mass of companies, therby increasing the importance of published accounts as a source of investment information.
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