Abstract

http://ssrn.com/abstract=1100732
 
 

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Economic Consequences of the Declining Relevance of Financial Reports


Nishi Sinha


Boston University - School of Management

John S. Watts


Ernst & Young LLP


Journal of Accounting Research, Vol. 39, No. 3, December 2001

Abstract:     
The proliferation of alternative information sources has reduced the relevance of corporate annual reports. This paper examines economic outcomes in an oligopolistic industry as investors become better informed but financial reports convey a smaller portion of the total information. Results show that an increase in alternate sources of information, and the resulting decline in relevance of financial reports, leads to a loss in economic efficiency despite the presence of additional information. Investors benefit, but at the expense of consumers and social welfare. Investors benefit not necessarily because the amount of information in the economy increases, but because there is a change in the channels through which the same information is communicated.

Keywords: relevance, financial reports, valuation

JEL Classification: D43, D81, G11, L13, M41, M45

Accepted Paper Series


Not Available For Download

Date posted: March 4, 2008  

Suggested Citation

Sinha , Nishi and Watts, John S., Economic Consequences of the Declining Relevance of Financial Reports. Journal of Accounting Research, Vol. 39, No. 3, December 2001. Available at SSRN: http://ssrn.com/abstract=1100732 or http://dx.doi.org/10.2139/ssrn.217488

Contact Information

Nishi Sinha (Contact Author)
Boston University - School of Management ( email )
595 Commonwealth Avenue, #522G
Boston, MA 02215
United States
617-353-2927 (Phone)
617-353-6667 (Fax)
John S. Watts
Ernst & Young LLP ( email )
1225 Connecticut Ave NW # 700
Washington, DC 20036
United States
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