Beruflich Dokumente
Kultur Dokumente
Firm valuation models Efficient-markets hypothesis CAPM Cross-sectional valuation studies Company-auditor roles Accounting data and creditors Accounting allocations Information economics
Cost-Benefit calculus
Cost considerations confined to producers Benefits for investors and creditors
Efficient-Markets Hypothesis
Information content: when an item of information causes a price response in the security Three forms
Weak Semistrong Strong
Return on Market
Characteristic Line -
Rj = i + Bj (Rm i)
Rj i
Rm
Bj
Empirical studies in accounting use a simpler approach called the market model
Rj = aj + Bj (Rm) + ej
aj
ej
Company-Auditor Roles
Key assumption of accounting research is that financial statement information is reliable...GAAP applied on consistent basis
Jointly produced by company and auditor Demand can be explained by agency theory
Auditor research
Qualified audit report leads to lower stock price Big Six audits more highly valued
Limitations
Real world decision makers face more complex decisions User diversity is an issue; behaviors may vary