The IASB/ FASB Framework (Section 3.7.1) includes comparability as an enhancing characteristic of financial information. If securities markets are efficient, give an argument why lack of comparability of a firm’s accounting policies with other firms should not affect its share price. Give an argument why its share price may be affected by lack of comparability.
Answer to relevant QuestionsOn February 27, 2007, Laurentian Bank of Canada released results for its first quarter, ending on January 31, 2007. It reported profit of 74 cents per share (70 cents per share before a non- recurring gain). Analysts’ ...Refer to Theory in Practice 4.1 in Section 4.2.2. Required a. Use efficient securities market theory to explain how “dart throwing” may be a desirable investment strategy. b. Explain Prof. Malkiel’s argument that risk ...Give examples of components of net income with a. High persistence b. Persistence of 1 c. Persistence of 0 Assume that the firm uses historical cost accounting.IAS 1 recognizes the need for full disclosure of the components of reported net income. Explain why full disclosure of net income components is important if investors are to properly interpret the implications of current ...An article in The Globe and Mail, February 16, 2002, reported that IBM used the $ 300 million proceeds of a sale of one of its business units to reduce operating expenses in its fourth quarter 2001 income statement. This ...
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