Do It Yourself: The Accounting Profession Shaping Transition In Germany

Social and economic transitions usually go along with changes in accounting and audit regulation that are typically shaped by the accounting profession. In many cases, these processes are characterized by the profession's interaction with state institutions. We analyze the transformation of accounting and audit regulation in the course of the German reunification between 1989 and 1990 which was characterized by regulatory chaos as a consequence of the absence of the state. Based on a framework of knowledge exchange and power we conducted interviews with 35 East and West German accounting and audit professionals to explore how the profession shaped the transitional regulatory space and to examine practices, norms and rites employed at that time. We find that, after an initial period of symbiosis between East German and West German professionals, the West German profession soon dominated the transition. However, the interaction of East and West German auditors was characterized by a dominating pragmatism, which not only facilitated the integration of the East German professionals but was crucial to make the profession successfully shape the regulatory space in the absence of state institutions.