Capital markets research and real world complexity: the emerging challenge of chaos theory

Article Abstract:

The methodological challenges posed by the capital markets research theory as well as the new statistical methods generated by the chaos theory were examined. These statistical techniques which have been applied in empirical studies that criticize some of the basic theories and models used to link accounting information to stock prices were also analyzed. The chaos and complexity theories were considered a comprehensive vision of the correlation between order and disorder that challenges the fundamental assumptions about the older Newtonian scientific world-view. The chaos and complexity theories generated new assumptions about stock price behavior suggesting that some traders and investors may use accounting information while others may not. It was found that much of the stock price movement is triggered by the stock market itself.

Securities and Commodity Exchanges, Security and commodity exchanges, Securities Exchanges, Research, Prices and rates, Stocks, Stock-exchange, Stock exchanges, Exchanges, Capital market, Capital markets, Stock prices, Chaos theory, Chaotic systems

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Competitor-focused accounting: an exploratory note

Article Abstract:

A survey was conducted to evaluate the apparent benefits and frequency of competitor-focused accounting (CFA) practices. Three major findings have been gleaned from the investigation. First, given the limited number of studies on CFA in management accounting literature, CFA usage was observed to be higher than what might have been reasonably expected. The second finding involves the relative use and perceived helpfulness of each CFA practice evaluated. Competitive monitoring is the most popular CFA practice and is perceived to be the most beneficial. The third finding is with regards to the study's contingency framework and the important relationships between CFA and competitive strategy, strategic mission and firm size. It was observed that, compared to other firms, prospector companies make more use of CFA practices.

Competition (Economics)

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Institutional thinking: the case of financial instruments

Article Abstract:

Changes in accounting standards are being constrained by institutional thinking. A case in point is the treatment of new financial instruments. The Financial Accounting Standards Board has responded to the challenges created by these new instruments by merely increasing disclosure requirements for amounts, timing and future cash flows to aid in the decision making of investors and creditors. It is argued that this type of response reflects regulators' lack of understanding about the true purpose of financial instruments. It also fails to address concerns about financial instruments such as why many of these instruments have short life spans and why these were developed to take advantage of accounting rules.

Standards, Accounting and auditing, Financial instruments, Financial Accounting Standards Board

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