Seminar_23_StandardSettingEconomicIssues

Financial Accounting Theory (5th Edition)

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Matt Steger Accounting 803 Seminar 23 – Standard Setting: Economic Issues In the first section of Chapter 12, Scott introduces to us to the overriding theories on information in the market as it relates to disclosure within financial statements. Dye and Sunder discuss the possible implications of allowing competition in the standard setting process; specifically, what might happen if domestic firms were allowed to choose between IASB and FASB standards for reporting purposes. Finally, Schipper and Yohn discuss the standard setting issues that surround accounting for financial asset transfers between firms. In Chapter 12, Standard Setting: Economic Issues , Scott begins the discussion by point out, “The fundamental problem of financial accounting theory . . . is how to reconcile the financial reporting and efficient contracting roles of accounting information or, equivalently, how to determine the socially ‘right’ amount of information” (Scott, 443). He proceeds to offer us the economic definition of the “right” by writing, “We define the right amount as that amount that equates the marginal social benefits of
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Seminar_23_StandardSettingEconomicIssues - M att Steger...

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