Transparency in an opaque market: Evaluative frictions between “thick” valuation and “thin” price data in the art market
Section snippets
Transparency and valuation
Transparency is defined as the ability to know market prices, supply and demand, and other features of a trade good (Law & Smullen, 2008), often with goals of market fairness and efficiency. Information asymmetry is a common explanation for benefits of transparency: if sellers know considerably more about the properties of their goods, buyers gain from more accessible market information, such as price data or “blue book” values. Though transparency is seen to have positive outcomes, it is also
Research context: the fine art market
These findings are one emergent theme from a larger project on the growth of art as a new financial investment category. Although investment is only one motivation for purchasing art, along with consumption, social value, and other factors (Belk, 1995, Hutter and Throsby, 2007), this development is understandably associated with concerns about market transparency and accountability, such as due diligence and other financial market expectations. We also find ongoing interest in increased market
Qualitative data, methods and analytical integration
This paper draws from a corpus of data developed during three years of ethnographic research (2007–2009) on the fine art market and use of art as a financial investment, including five months of fieldwork in London and eight months in New York, interviews and secondary sources (Table 1). The primary interviews were focused on actors in New York and London, selected because in addition to being centers of the global financial market, London and New York are hubs of the global art auction trade (
Auction prices and the quest for transparency
It is useful to question what transparency meant for participants in the art market. Given the opacity of the market, providers had a goal of shedding light into the area, for example, ArtPrice's Art Market Insight, featuring the “mechanisms and secrets of the art auction market revealed by our press agency” (ArtPrice, 2010b). This represented a considerable shift, as art buyers were previously highly reliant on trusted art dealers (interview with art market information provider representative,
Discussion
The findings highlight the complicated role of auction prices in valuation. Information providers with auction price databases and transparency goals made traditional valuation more efficient and provided a reference point for buyers. “Hard numbers” were essential for the accountability and transparency needs of investors, enlightening to uninformed newcomers, useful to gallerists and curators for appraisal, desired by collectors wanting to buy intelligently and helpful for museums facing
Contributions
The study illustrates productive connections between the critical transparency literature and social studies of valuation and evaluation research through a focus on expert valuation strategies and the frictions seen with non-expert use of more accessible price data. Studying valuation in the art market shows the importance of understanding the characteristics of a given object, relevant external “attachments” (Hennion, 2004, Hennion, 2015) and the context in which comparable prices were set, a
Acknowledgments
This research was funded by fieldwork grants from the American Philosophical Society, University of Chicago Overseas Dissertation Fund, and the University of Chicago Nicholson Center for British Studies. Revisions were supported by the University of Chicago Michael and Ling Markovitz Fellowship, University of Melbourne Department of Management and Marketing and University of Melbourne Faculty of Business and Economics. This paper benefitted significantly from the generous comments of the AOS
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2022, British Accounting ReviewCitation Excerpt :Critical accounting research has also problematised the way corporations are dichotomising, silencing or omitting certain accounting and disclosures (Andrew & Cortese, 2011; Hussain, Liu, & Miller, 2020; Journeault, Levant, & Picard, 2021; Semeen & Islam, 2020). In the context of the general absence of social and environmental disclosure regulation (i.e., guidelines/requirements/standards - see footnote 15), and therefore of standardised (and comparable) reports and disclosures, social and environmental transparency is a complex concept and difficult to determine (i.e., Gold & Heikkurinen, 2018; Coslor, 2016; Roberts, 2009). While disclosure (or making information available), particularly with regards to voluntary disclosures, can therefore be criticised as not giving a full account, it is an important part of becoming transparent and has been used as such in quantitative accounting research to understand the motivation behind ongoing corporate transparency practices (e.g., Bushman et al., 2004; Han, Kang, & Yoo, 2012; Islam & Van Staden, 2018).
Making artworks valuable: Categorisation and modes of valuation work
2021, Accounting, Organizations and SocietyCitation Excerpt :Although bolstering valuation work with credentialing may favour evaluation being perceived as valid and facilitating value accretion, efforts to conceal the more subjective facets of valuation work conditions opacity (Chiapello, 2015; Coslor, 2016; Karpik, 2010) and generates the perception that art is a good that is ‘difficult to value’. We believe that the categories of interpreting, credentialing, and projecting have applications outside art – especially for experiential goods such as food, wine (see Negro, Hannan, & Rao, 2011), and classical music (see Glynn & Lounsbury, 2005), where individuals make complex, unique, and subjective aesthetic, gustative, and emotional judgments that render the workings of such markets complex (Arjaliès & Durand, 2019) and valuations difficult (Coslor, 2016; Van der Zwan, 2014). Like any culture-based asset, art has no intrinsic value; what is valuable is socially constructed.