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Publisher Summary This chapter describes the Anglo-American perspective of accounting standard. There may well be demands for standardized information in unregulated markets. Information production, and usage are both costly activities, and standardization will confer economies in information processing, and contracting. Benston argues against any system of government regulation of accounting standards. Zecher summarizes the special assumptions of information economics in a world which recognizes the significance of portfolios, the Capital Asset Pricing Model, and efficient market theory. In modern capital market theory, the role of accounting information is seen in the context of a market with rich alternative sources of nonaccounting information. Once admitted, these factors have profound implications for accounting standards. There may be little point in companies disclosing information about their unique financial characteristics if the returns on their securities are dominated by systematic effects in the market, moderated by a beta specific to each security. |
