A note on interpreting "incremental information content"

Article Abstract:

Studies of incremental information content typically examine coefficients yielded by a regression of two or more accounting income variables for a series of market-adjusted security returns over a 12-month period. Research typically assumes that the composition of information offering the greatest information content is limited to those components which are valued by investors. The results of studies by J. Rayburn (1986) and R.D. Bowen et al. (1987) were examined from the perspective of the disclosure and composition of income. Both studies support the observation that accrual and cash flow components add to the informativeness of information. Research results reveal that data from Bowen et al. offers weak support for the assertion that accrual and cash flow components are valued differently by investors. The data from Rayburn do not refute the hypothesis that the market values accrual and cash flow components equivalently.

Accounting and auditing, Stock-exchange, Stock exchanges, Cash flow, Bowen, R.D., Rayburn, J.

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What affects the efficiency of a market? Some answers from the laboratory

Article Abstract:

Information regulation's nature is dependent on capital markets' information efficiency, and accounting researchers have done much in attempting to measure efficiency, but an informationally efficient market is unobservable and therefore difficult to model. The efficiency of a laboratory market can be measured through the creation of another 'artificial' economy patterned after the economy of interest, wherein all information is disseminated fully. With this method of market efficiency measurement, the influence of various market and information structures on efficiency may be investigated.

Models, Accounting, Economics, Economic research, Information management, Efficient market theory

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