In Memoriam: Accounting Professor Emeritus George J. Staubus, Known for the “Decision-Usefulness Theory of Accounting”

George J. Staubus, the Michael Chetkovich professor emeritus at UC Berkeley’s Haas School of Business, died on March 21 in Oakland, Calif., from bone marrow failure. He was 87.

Professor Staubus dedicated his life’s work not only to the teaching and research of accounting but to continued improvement of the standards and practices of financial reporting.  Staubus’ colleagues say his work developing the “decision-usefulness theory of accounting” is an important contribution to financial accounting theory in the twentieth century.

The decision-usefulness theory of accounting provides direction for all accounting and financial reporting choices. Under this theory, the primary objective of financial reporting is to provide information that is useful in making investment decisions. 

“Professor Staubus was the first to explicitly identify that objective and to link it to enterprise cash flows or a cash flow-oriented view of how assets and liabilities are measured. Staubus' work has surged in importance in recent years as the debate about accounting's underlying theoretical framework is being re-examined by standard setters worldwide,” says Maria Nondorf, executive director, Haas Center for Financial Reporting and Management.

Prior to Staubus pointing out the importance of cash flows in investment decisions, the theory was solely focused on accounting-based net income. Despite numerous rejections of Staubus’ insight in the 1950’s, the academic community embraced the decision-usefulness theory in the sixties, and the standards-setting community followed suit in the seventies.

Staubus developed the “decision-usefulness theory of accounting” with his dissertation, An Accounting Concept of Revenue (1954/1980), and two subsequent articles in The Accounting Review (1958 and 1959). The theory was presented in his 1961 book, A Theory of Accounting to Investors.

More recently, Staubus commented on the theory in the preface of The Decision-Usefulness Theory of Accounting: A Limited History (1999), “From today’s perspective, it is not a broad theory of accounting. The key to the decision-usefulness theory is the decision-usefulness objective. It is the base on which a coherent, broad structure of ideas has been built. No other such structure of accounting ideas has been developed, to my knowledge.”

Staubus served on the Haas accounting faculty for 40 years, from 1952 until 1992. Post-retirement, he continued to play an active role in the accounting program including by participating in student activities, the annual Center for Financial Reporting and Management conference, and initiating the Berkeley Award for Distinguished Contributions to Financial Reporting, and serving on the Award's selection committee.

“George was a very serious accounting scholar. He published more articles in The Accounting Review than anyone during his active period. George served as research director of the Financial Accounting Standards Board,” says colleague Alan Cerf, accounting professor emeritus.

 Staubus received the Lifetime Achievement Award for Distinguished Contributions to the Accounting Program at the Haas School in 2009 and the school’s Cheit Award for Excellence in Teaching in the Undergraduate Program in 1991. In 1982, the American Accounting Association named Staubus “Distinguished International Lecturer.” The California Society of Certified Public Accountants honored Staubus with its Distinguished Professor Award in 1981.

Former Haas School Dean Raymond Miles remembers Staubus’ sage-like personality and demeanor,“George Staubus was a constant source of good advice, particularly in the periods when I held administrative posts. George always presented a calm appearance, one that cooled off heated moments, and lent good cheer to positive situations.  He will be missed.”  

Staubus is survived by his wife of 65 years, Sarah, and their four children, Lindsay, Martin, Paul, and Janette.

The family will announce details of a remembrance ceremony at a later date. Contributions in memory of George Staubus may be made to these organizations that were dear to his heart:

Unitarian Universalist Church of Berkeley
1 Lawson Rd
Kensington, CA 94707

The Lair of the Golden Bear
Camp Blue c/o Cal Alumni Association
1 Alumni House
Berkeley, CA 94720-7520