Chapter 4 notes
Good evening class.
Welcome to our version of Acco 400. Our assigned topic is chapter 4 – efficient market securities.
We will be asking questions throughout our presentation and we have prepared a small pop quiz at the end to help get you some participation marks.
And I’ll start by introducing our group to the class.
My name is Kristina this is Chris, Yuanhao, Johnathan and Victoria.
Here’s a Brief overview of what we will be talking about….
Now let’s begin the lecture…..chris the floor is yours.
……………………………………………………………………………………………………..
I will be covering the section about Implications of efficient market securities for financial reporting. The textbook refers to an article written by W.H Beaver, “What should be the FASB’s Objectives”. The paper, published in 1973, illustrates the early enthusiasm of accounting theorists for efficient securities markets and highlights the concept of decision usefulness that underlines the conceptual framework. For the sake of this chapter, the book outlines Beaver’s argument that efficient securities market has 4 major implications for financial reporting.
Can anyone tell me what these 4 implications are??
1) The First major implication is that accounting policies adopted by firms don’t affect their security prices as long as they don’t directly affect future cash flows and dividends.
(Do these policy choices affect net income? YES)
But as long as firms disclose their selected policy or any info needed to convert from one method to another, the market can see through the ultimate cashflow and dividend implications regardless of what policy is used for reporting.
2) The second implication is that firms should disclose as much information about themselves as is cost effective. Meaning that managers should report information about the firm as long as the benefits to investors exceeds the cost. The greater amount of cost-effective information a firm discloses about itself, the greater investor confidence in the
Welcome to our version of Acco 400. Our assigned topic is chapter 4 – efficient market securities.
We will be asking questions throughout our presentation and we have prepared a small pop quiz at the end to help get you some participation marks.
And I’ll start by introducing our group to the class.
My name is Kristina this is Chris, Yuanhao, Johnathan and Victoria.
Here’s a Brief overview of what we will be talking about….
Now let’s begin the lecture…..chris the floor is yours.
……………………………………………………………………………………………………..
I will be covering the section about Implications of efficient market securities for financial reporting. The textbook refers to an article written by W.H Beaver, “What should be the FASB’s Objectives”. The paper, published in 1973, illustrates the early enthusiasm of accounting theorists for efficient securities markets and highlights the concept of decision usefulness that underlines the conceptual framework. For the sake of this chapter, the book outlines Beaver’s argument that efficient securities market has 4 major implications for financial reporting.
Can anyone tell me what these 4 implications are??
1) The First major implication is that accounting policies adopted by firms don’t affect their security prices as long as they don’t directly affect future cash flows and dividends.
(Do these policy choices affect net income? YES)
But as long as firms disclose their selected policy or any info needed to convert from one method to another, the market can see through the ultimate cashflow and dividend implications regardless of what policy is used for reporting.
2) The second implication is that firms should disclose as much information about themselves as is cost effective. Meaning that managers should report information about the firm as long as the benefits to investors exceeds the cost. The greater amount of cost-effective information a firm discloses about itself, the greater investor confidence in the