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| Author: | Barth, M. E. Clinch, G. Shibano, T. |
| Title: | Market Effects of Recognition and Disclosure |
| Journal: | Journal of Accounting Research
2003 : SEP, VOL. 41: 4, p. 581-610 |
| Index terms: | PRICING PRICES PRICE DETERMINATION DISCLOSURE RELIABILITY |
| Language: | eng |
| Abstract: | Disclosure model reveals that price informativeness is determined by the interaction of the qualities of three information sources and accounting expertise acquisition. It also reveals that recognition of an accounting amount alters each of these, thereby affecting price informativeness. Perhaps surprisingly, the authors find that recognition of a highly unreliable accounting amount, rather than simply disclosing it, can result in greater price informativeness. Likewise, recognition of a highly reliable amount can result in lower price informativeness. The findings suggest that, because of the effects of aggregation, basing recognition decisions on reliability alone is too simplistic. Reliability relative to relevance is key, not reliability per se. |
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