Discussion of 'On the Frequency, Quality, and Informational Role of Mandatory Financial Reports.'

Article Abstract:

The shortcomings of Gigler and Hemmer's (1998) study on what information should be disclosed and when it should be released by firms are discussed. The researchers assumed a stewardship perspective where a principal aims to determine the contract and reporting policy that limits the anticipated cost of compensating an agent while making sure that this agent complies with the action policy preferred by the principal and that the expected utility of the agent from this contract can balance the opportunity cost of employing the agent. However, Gigler and Hemmer failed to incorporate the role of feedback that would modify the actions of the agent, and possibly the principal, over time because the preferred action choice by the agent in each period is assigned ex ante. In general, the general applicability of the model to financial reporting issues is in question.

Profits, Corporations, Valuation, Corporate profits

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Reliability-relevance trade-offs and the efficiency of aggregation

Article Abstract:

The consequences of aggregation and disaggregation in an investment setting depicting reliability-relevance trade-offs are examined. The results are generated in a model of multidimensional report manipulation, which is important as the earnings management, balance sheet management and performance report management is seldom restricted to a single transaction, a single account, or a single performance measure.

Accounting, auditing, & bookkeeping, Accounting & Auditing Services, Accounting, Tax Preparation, Bookkeeping, and Payroll Services, Police Protection, Fraud, Analysis, Accounting firms, Accounting services, Financial statements

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Industry-wide disclosure dynamics

Article Abstract:

When one company in an industry voluntarily discloses information about itself, good or bad, other companies in that industry seem to be compelled to also release similar information. A model explaining this phenomenon is presented.

United States

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