Why does a measurement approach to decision usefulness suggest more value relevant information in the financial statements proper, when efficient securities market theory implies that financial statement notes or other disclosure would be just as useful?
Answer to relevant QuestionsWhat will be the impact on relevance, reliability, and decision usefulness of financial statement information resulting from accountants’ adoption of a measurement approach?Lev, in his article “On the Usefulness of Earnings” (1989), pointed out the low ability of reported net income to explain variations in security prices around the release date of earnings information. Lev attributed this ...Recent years have seen considerable litigation against auditors in the United States. A major source of this litigation arises from the pressure firms feel to meet analysts’ earnings expectations. To avoid reporting lower- ...Under IAS 39, the IASB financial instrument standard in effect at the time, loans receivable were valued at amortized cost. That is, valuation was based on expected future receipts from the loan discounted at the effective ...Refer to the sensitivity analysis of Husky Energy Inc. reproduced in Table 7.2. The analysis discloses the potential effects of changes in prices of oil and natural gas, and of changes in the Can. / U. S. dollar exchange ...
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