Financial Accounting Theory - Ball and Brown Study

1674 Words Nov 17th, 2013 7 Pages
Conclusion of Research Paper

Through the paper and the information provided by the textbook, it is clear that two brief conclusions we can get and explanations will be attached.

1. The financial statement do impact the share price
2. The influence caused by the financial statement is limited.

The main reason, that financial statement impact the share price, is the efficient capital market. Namely, the efficient security market will go hand in hand with full disclosure. Once the relevant information provided by the management on the timely basis, the rational investors could make decision based on the new information.

Moreover, there are some differences between the narrow window and the long window, the previous one show the
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The second level is more precise criteria based on different industrial characteristics should be applied in the accounting information system for the business performance and risk. The role of financial reports, which is to releasing more reference value, is critical for users. The more precise the information is, the more reliance they can ensure.

For different industries, the differentiation should be figured out and make it accessible and understandable for investors. For example, the manufacturing companies and retailing companies have the differences that should presented and give clear clues to analyze for naïve investors. In general, the financial report should show the industrial characters apparently with reliance.

The third level is that some particular accounting issues related to specific company could be designed in order to make sure that the information is more accessible for investors. It is mainly based on the fundamental value of the company and the strategy within the industry. For instance, the company with unique value chain (e.g. Wal-Mart) creating more value to the customers, the financial report could show the unique point in their report in order to offer better information to the investors. The accounting information with the special information only in the company could improve the reliability gradually, with less information asymmetry suffered by
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