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powerpoint 1 - 2 Introduction to Financial Accounting...

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2: Introduction to Financial Accounting Theory and Information Asymmetry
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2 A few things to clarify 1. Vista https://www.elearning.ubc.ca/home/index.cfm?menuClicked 1. Forming groups Groups of 2 for writing assignment Groups of 4 for case Within the same section Report group: Jan. 20 th , 2010
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3 Outline 1. Introduction – the need for financial accounting theory 2. Information, information asymmetry 3. Card game 4. The framework for financial accounting theory 5. Relevance and reliability Discussion question 1. Summary
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4 The Need for Financial Accounting Theory Why does accounting exist?
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5 The Need for Financial Accounting Theory Common misconception: accounting exists because it is required by laws and regulation Reality: demand and supply Rigorous economic analysis provides answers to important questions.
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6 The Need for Financial Accounting Theory - II Some questions addressed by economic analysis: Why do people and companies voluntarily disclose? Why is there a system of mandatory disclosure? What is behind the conceptual framework formalized by the standard setters? How important is accounting information for investing? Why is accounting information used in contracts? How does that affect firms’ financial reporting practices? How does the contracting role affect accounting standards?
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