The economics and politics of accounting

About this book

Consider the following examples of financial accounting "insights": (a) investors always prefer more information to less; (b) more disclosure by firms is useful since it increases the amount of information in capital markets; (c) regulators must force firms to disclose information, otherwise they would conceal bad news; (d) if firms can "lie" in their disclosures without threat of being caught, they will do so, therefore markets must be protected from reacting to such information; (e) earnings management is a bad thing, and regulators should reduce accounting choices; (f) management evaluation should be based solely on controllable financial results; (g) effective auditing deters management from making erroneous financial reports.