Essays on The Measurement Approach on Decision Usefulness Coursework

Download full paperFile format: .doc, available for editing

The paper 'The Measurement Approach on Decision Usefulness" is a great example of marketing coursework.   The measurement approach to decision usefulness means the correct usage of reasonable values properly in the financial statements. The financial statements help the investors to predict the future of the organisation and at what position the company will be at if all the policies were followed. Generally, the measurement approach is to help the investors to determine the firm value. Despite the fact that the measurement approach is to use, it is not supposed to interfere with the cost reduction in reliability (Ackerlof & Kranton 2010, p. 78).

There are several areas that the investors are involved in and one of them is the efficiency in the security market. There has been a claim that securities cannot be efficient to support the position of the company in the future. The reliance of the securities cannot be fully used to value the company and hence the usefulness of decision making is threatened. For example, the investors may not be very keen to process the information as it is stated in the theory of efficiency, so this can be improved by using other values in the financial statements.

The other factors that lead to the variability of the share price are illustrated in the Ohlson clean surplus theory (American Accounting Association 2006, p. 45). The theory gives a provision for support for measurement increment and also from any liability which is legal that the accountants can be subjected to when the company is suffering the financial constraints. Security markets The has been questioning whether the securities are to be believed in and relied upon when it comes to making a decision regarding the market efficiency and whether it does convey the best information to the investors (Andreoni & Samuelson 2006, p.

143). Despite the fact that the securities are not efficient there can be an improvement in the financial reporting which will help to reduce the inefficiencies and hence improve the security market operations. That is, if the firm reports correctly about its accounts, the investors will be able to estimate the future of the company very easily by identification of the securities which have been mispriced (Ariely 2008, p.

45). The argument is that normal investor behaviour may not go hand in hand with rational decision theory and models of investment. The investor may not be in a position to make a concrete decision after they have received the information. There a suggestion by the psychologists that the individuals normally tend to overestimate after they have received the information.

References

Ackerlof, G, & Kranton, R 2010, Identity Economics, Princeton University Press, New Jersey

American Accounting Association 2006, A Statement of Basic Accounting Theory, Evanston,

Ilinois.

Andreoni, J, & Samuelson, L, 2006, Building Rational Cooperation, Journal of Economic

Theory, vol. 3, no. 8, pp.117-154.

Ariely, D 2008, Predictably Irrational: the Hidden Forces that Shape our Decisions, Harper

Collins, New York.

Ball, R 2008, What Is the Actual Economic Role of Financial Reporting, Accounting

Horizons, vol. 22, no. 4, pp.427-432.

Barth, M 2008, Global financial reporting: Implications for U.S.Academics. The Accounting

Review, vol. 83, no.5, pp.1159-1179.

Beaver, W 2001, Financial Reporting: An Accounting Revolution, Prentice-Hall,

New Jersey.

Beaver, W & Demski, J 2004, The nature of financial accounting objectives: A summary and

synthesis, Journal of Accounting Research. Vol.12, no. 4 pp.170-187.

Dyckman, T & Morse, D 2006, Efficient Capital Markets and Accounting: A Critical

Analysis, Prentice-Hall, New Jersey.

Granovetter, M 2002, Economic Institutions as Social Constructions: A Framework for

Analysis, Acta Sociologica vol.35, no.8, pp. 3-11.

Ijiri, Y 2001, The Theory of Accounting Measurement, American Accounting Association,

Florida.

Kay, J 2009, The Rationale of the Market Economy: A European Perspective, Capitalism and

Society, vol.4, no.3, pp.1-10.

Lee, T 2006, The FASB in Accounting for Economic Reality. Accounting and the Public

Interest, vol.6, no.3,pp. 1-21.

Staubus, G 2001, The Decision-Usefulness Theory of Accounting: A Limited History, Garland

Publishing, Inc, London.

Young, J 2006, king up users, Accounting, Organizations and Society, vol.31, no.6, pp.579- 600.

Download full paperFile format: .doc, available for editing
Contact Us