The purpose of this study was to obtain preliminary evidence in the fields of corporate financial reporting and financial risk analysis on the relevance of applying the constructal law, areas demarcated according to the golden ratio (≈ 1.618:1), and the second law of thermodynamics-assuming that business entities are attracted toward states of maximum debt. More specifically, the study was aimed at contributing to the interpretation of the capital structure formation of business sectors by means of liabilities-to-assets ratio analyses. Data was obtained from published financial statements pertaining to companies that were listed on the Johannesburg Stock Exchange, mainly relating to the financials, basic materials and consumer goods sectors. It was found that, respectively, 82,35% and 100% of the liabilities to assets of the basic materials and consumer goods sectors fell within the demarcated areas during the periods that were reviewed. This indicates the tendency of these sectors to arrange their capital structures according to the constructal law. On the contrary, the highly leveraged capital structure of the financials sector fell distinctly out of the demarcated areas. It is posited that the constructal law, the second law of thermodynamics, as well as the golden ratio are relevant when analysing liabilities to assets; despite of the laws and the ratio being associated with the natural sciences. Further research could lead to the development of new theories regarding corporate financial reporting and risk analysis, with the potential to enhance the transdisciplinary standing and relevance thereof.
Developments in science, technology and sophisticated interconnected social networks increase the speed and volatility of the flow of economic-related energies, such as financial and intellectual capital. These developments require an information theory on corporate financial reporting that is stable at a fundamental level and focused on the disclosure of those systemic attributes that are pivotal to the sustenance of business entities operating in the global economy, or in economies with similar traits. The limited success in attaining stability is caused by, among others, the application of diverse, restricted and even opposing perspectives, resulting in random theoretical development, often unaligned with economic reality. The main aim of the article is to investigate whether the introduction of an underlying concept, principle or theorem, founded on the phenomenon of flow, to generalpurpose corporate financial reporting theory could contribute to rendering stable guidance for coherent theoretical development while simultaneously enhancing alignment with the current global economy. As the study was conducted at conceptual level, a qualitative, transdisciplinary theoretical research methodology was applied by taking into account related basic concepts of philosophy, corporate financial reporting theory, economics, management accounting, physics and complexity. The study suggests that the conceptualisation of flow in general-purpose corporate financial reporting theory could contribute to rendering stable guidance for further coherent theoretical development, and improve on the alignment of the theory with the dynamics of the current global economy. This finding creates the opportunity to explore a variety of new reporting approaches from a scientific perspective, which could aid to enhance the disclosure of useful financial information.
Accountants are looking for innovative solutions to challenges and problems that seem to become increasingly numerous and complicated. Researchers debate whether the emergence of these challenges is due to a general dissatisfaction with the existing accounting paradigm. This article therefore presents a transdisciplinary approach aimed at creating a new accounting paradigm.The discipline of accounting is challenged by blending the limitations within the present paradigm with the discoveries in physics and quantum mechanics. This study shifts the attention to those aspects of reality that characterise today's accelerated social change, disorder, instability, diversity, disequilibrium and non-linear relationships -all with a heightened sensitivity to the flow of time. By interpreting financial accounting and reporting from this perspective, new perspectives are offered from a holistic paradigm of transcendence in relation to the arrow of time and information capacity.
The purpose of this study was to obtain preliminary evidence in the fields of corporate financial reporting and financial risk analysis on the relevance of applying the constructal law, areas demarcated according to the golden ratio (≈ 1.618:1), and the second law of thermodynamics-assuming that business entities are attracted toward states of maximum debt. More specifically, the study was aimed at contributing to the interpretation of the capital structure formation of business sectors by means of liabilities-to-assets ratio analyses. Data was obtained from published financial statements pertaining to companies that were listed on the Johannesburg Stock Exchange, mainly relating to the financials, basic materials and consumer goods sectors. It was found that, respectively, 82,35% and 100% of the liabilities to assets of the basic materials and consumer goods sectors fell within the demarcated areas during the periods that were reviewed. This indicates the tendency of these sectors to arrange their capital structures according to the constructal law. On the contrary, the highly leveraged capital structure of the financials sector fell distinctly out of the demarcated areas. It is posited that the constructal law, the second law of thermodynamics, as well as the golden ratio are relevant when analysing liabilities to assets; despite of the laws and the ratio being associated with the natural sciences. Further research could lead to the development of new theories regarding corporate financial reporting and risk analysis, with the potential to enhance the transdisciplinary standing and relevance thereof.
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