ACCO 340 Lecture Notes - Lecture 5: Financial Statement, Stock Split
2 Feb 2017
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Document Summary
The information approach to decision usefulness is an approach to financial reporting that recognizes individual responsibility for predicting future firm performance and that concentrates on providing useful information for this purpose. The approach assumes securities market efficiency, recognizing that the market will react to useful information from any source. Information approach implies that empirical research can help accountants to further increase usefulness by letting market response guide them as to what information is and is not valued by investors. *information is a commodity and its private and social values are not the same. *accountants cannot claim that the best accounting policy is the one that produces the greatest market response due to the fact of cost mentioned above. *securities market will work better to allocate scarce capital if security prices provide good indicators of investment opportunities and fundamental firm value.
