Cracks in sovereign trust. Accounting and institutional crisis in a public monopoly: The Real Compagnia di Assicurazioni Marittime in the Kingdom of Naples (1751-1802)

• Introduction: This paper explores the relationship between accounting and institutional crisis by examining how the diffusion of revolutionary ideologies within an absolutist regime can affect the performance of State-owned enterprises (SOEs). The analysis focuses on the case of the Real Compagnia di Assicurazioni Marittime (RCAM), a marine insurance public monopoly founded by Charles III of Bourbon in the Kingdom of Naples in 1751. • Aims of the work: This study examines the accounting system of the RCAM to assess how the institutional disruption that unfolded in Naples at the end of the 18th century - triggered by the spread of reformist ideologies inspired by the French Revolution - contributed to the progressive weakening of the company’s performance. • Methodological approach: From a historical institutionalist perspective, the research employs an integrated methodological approach combining qualitative (archival) investigation with quantitative (econometric) analysis. The RCAM’s financial statements were complemented by the company’s non-financial documentation, retrieved from the Naples State Archive, and analysed in two stages: (1) a Hidden Markov Model (HMM) to identify latent regime dynamics in the company’s performance, and (2) an Interrupted Time Series (ITS) quasi-experimental model to estimate structural changes associated with the institutional disruption. • Main findings: The findings demonstrate how the “crack in trust” in the absolutist government of King Ferdinand IV of Bourbon affected the RCAM’s fate, within a broader context shaped by reformist currents inspired by Enlightenment ideas and by the spread of libertarian thought from revolutionary France into the Kingdom of Naples. • Contribution to the literature: This study contributes to the literature by highlighting accounting’s potential to reflect institutional instability within a public monopoly. It also supports the use of econometrics in accounting history research.