Accounting Theory

The Most Significant Events (and their causes) in the Development of Accounting Theory Post the 1929 New York Stock Exchange (NYSE) Crash.

The New York Stock Exchange (NYSE) is a corporation, operated by a board of directors, accountable for listing securities, establishing policies and supervising the stock exchange and its member activities, as well as using floor traders to conduct transactions of their clients and investors. Also, nicknamed as the “Big Board”, it is the world’s largest stock exchange by dollar volume whereby its share volume exceeded that of NASDAQ during the 1990s, with a total market capitalization of listed companies, five times that of those on NASDAQ . Additionally, NYSE comprises of a global capitalization of $21 trillion, including $7.1 trillion in non-U.S companies (Investopedia, 2008).

However, on October 29, 1929, known as Black Tuesday, the Wall Street crash marked the beginning of the Great Depression. Unprecedented, the profundity of this depression was severe. Total spending in the American economy was dropping, business firms began cutting production, banks failed and many firms went bankrupt. Additionally, in March, 1933, there was more than a quarter of unemployment in the United States, while another quarter was left to part-time work. Although conditions recovered after a series of relief measures by then President Franklin Roosevelt, high rates of unemployment and subdued business activities continued to haunt the economy for many years. Today, economists came up with three explanations for the depression; firstly, the Great Depression was caused primarily by a fall in total demand which could only be restored by large increases in government spending, secondly, its severity culminated from the unwillingness of the Federal Reserve System to prevent bank failures and to maintain adequate money supply and lastly, the depression was part of a larger global depression (Caldwell & O’Driscoll, 2007).

As much as the...