Prevalence of Fisher's theory in mainstream accounting and economic research

Irving Fisher's capital-income theory uses the discounted cash-flow model to explain prices, markets, and capitalism. How did his theory get into ‘fair-value’ accounting standards given that his framework was discredited in the post-1929 crisis aftermath? This article explores one of the possible causes, namely, the popularity of Fisher's theory in mainstream accounting and economic research albeit its lack of supportive evidence and logical consistency. Nonetheless, its history of ideas is far from straightforward. Although ‘decision-usefulness’ researchers (who inform standard setters) currently endorse Fisher's theory, they have seldom engaged with Fisher's writings. Alongside them, capital-income theorists, normative-theorists and mainstream-economists have been advocating Fisher's theory with a taken-for-granted-knowledge status, which often fails to cite its heritage. Furthermore, although ‘decision-usefulness’ researchers have historically claimed opposition to normative theories, this opposition is deceptive. Fisher's theory is undeniably normative. It favours shareholders/owners over other stakeholders. Moreover, various normative-theorists have accepted Fisher's theory for valuation purposes.