Accounting and Risk : In the eyes of a financially successful entrepreneur

University dissertation from Handelshögskolan, Företagsekonomiska Institutionen

Abstract: This is a study dedicated to accounting in the context of entrepreneurship. The point of departure is a matter of controversy regarding the risk-taking of entrepreneurs. A risk paradox exists since entrepreneurs are seen as risk-takers although they do not exhibit a higher tendency to take risks than other individuals. The risk perception of entrepreneurs is a common explanation for the existence of the paradox. However, nobody has given a more elaborate and satisfying explanation of how the entrepreneurs perceive risk. As a result the relation between entrepreneurial risk-taking in theory and in practice remains relatively unclear.Information available is said to be a major contributor to shape risk perceptions of individuals. Accounting, which is the most widespread type of information in organizations, is in centre for studying the perception of risk in this study. In addition, the theoretical framework ties the notions of accounting, entrepreneurship and risk more closely together than in previous research.The empirical delineation covers a case study of a financially successful entrepreneur. This entrepreneur seems to have established a business philosophy that involves rules for what he will invest in, how committed he will be in an investment, how investments are financed, who he will cooperate with, how he will make the necessary decisions, when to invest, his role in all this and, interestingly enough, accounting is incorporated in his business philosophy.In short, this study implies that the perspective is crucial to understand the risk-taking of the entrepreneur. The entrepreneur might not at all perceive a high risk in a situation where the literature would suggest the opposite. Further, the case indicates that the entrepreneur uses accounting to perceive risk in managing operations as well as in entrepreneurial processes.

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