Financial Accounting Information and the Relevance/Irrelevance Issue
- Topics:
- Financial Statements
- Tags:
- Canisius College,
- Capital Market,
- Finance,
- Financial,
- Financial Accounting,
- Financial Services,
- Financial Statements,
- Investment
- Source:
- Canisius College
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Overview: Some current research concludes that the numbers in financial statement are not relevant for three basic reasons. The numbers: are not isomorphic with capital market values, they do not have a future orientation, and are un-interpretable since they are based upon five different measurement attributes. The lack of isomorphism argument is invalid since actual current performance is not identical with the capital market expectations of future performance. The lack of a future orientation argument is invalid since financial statements capture what has happened and not what is expected to happen. Since a single measurement attribute is required to produce meaningful measures, the un-interpretability argument holds.
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Format: PDF | Size: 149KB | Date: Feb 2005 | Pages: 42
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