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powerpoint 5 - 1 7. The Measurement Approach to Decision...

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Unformatted text preview: 1 7. The Measurement Approach to Decision Usefulness Outline Overview of info and measurement approaches Why measurement approach? Market Inefficiency Decline in usefulness of accounting info Examples 2 Evaluation of the two perspectives 2 The measurement perspective Can accounting information be made more useful? accounting number are made more easily understood Accounting Users Investmen accounting number are made more easily understood, or reported in a theoretically more correct way. 3 Accounting Information Valuation Investment Decision The information perspective Users Accounting Information Valuation Investment Decision 4 Accounting info provide inputs to users decision process. Assuming market efficiency, accountants do not need to provide value estimates. The usefulness of accounting info can be measured by the magnitude of market reaction to the accounting info. 3 Re-examine the assumption of info perspective -- EMH Are the market participants sophisticated...
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powerpoint 5 - 1 7. The Measurement Approach to Decision...

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