Unbiased Accounting Considering Profitability
University of Bern - Faculty of Economics and Social Sciences
University of Hohenheim
June 15, 2011
Unbiased accounting is supposed to provide perfect economic information to decision makers. We identify three notions of unbiased accounting in the literature, promoting return-, cost-, or value-disclosure as guiding principle and evaluate them based on the criterion of informational sufficiency. We show that the unbiased accounting regimes systematically differ based on the criterion of unconditional conservatism on a single project level as well as in a steady state framework. Given the existence of systematic biases we show that some common assertions in the literature related to the notion of unbiased accounting are misleading. For regulation, financial analysis, and stewardship purposes the respective regimes are informationally sufficient if and only if the appropriate performance indicator is applied when measuring profitability.
Number of Pages in PDF File: 53
Keywords: Unbiased accounting, neutral accounting, value accounting, conservative accounting, conservatism in accounting, fair value, historic cost, economic accounting, steady state analysis
JEL Classification: M41, M48working papers series
Date posted: April 1, 2011 ; Last revised: December 20, 2011
© 2013 Social Science Electronic Publishing, Inc. All Rights Reserved.
This page was processed by apollo4 in 0.672 seconds