Abstract

http://ssrn.com/abstract=275668
 
 

References (22)



 
 

Citations (13)



 


 



Imprecision in Accounting Measurement: Can it be Value Enhancing?


Chandra Kanodia


University of Minnesota - Carlson School of Management

Rajdeep Singh


University of Minnesota - Twin Cities - Carlson School of Management

Andrew E. Spero


University of Minnesota - Twin Cities - Carlson School of Management

May 2004


Abstract:     
Accounting measurements of firms' investments are usually imprecise. We study the economic consequences of such imprecision in a setting where accounting imprecision interacts with information asymmetry regarding the ex ante profitability of the project that is privately known by the firm's managers. Absent agency and risk sharing considerations, we find that some degree of accounting imprecision could actually be value enhancing. We characterize the optimal degree of imprecision and identify its key determinants. The greater the information asymmetry about the project's profitability, the greater is the imprecision that should be tolerated in the measurement of the firm's investment.

Number of Pages in PDF File: 44

Keywords: Noisy signaling, Accounting Imprecision, Investment incentives

JEL Classification: D82, G31, L10, M41

working papers series


Download This Paper

Date posted: July 25, 2001  

Suggested Citation

Kanodia, Chandra and Singh, Rajdeep and Spero, Andrew E., Imprecision in Accounting Measurement: Can it be Value Enhancing? (May 2004). Available at SSRN: http://ssrn.com/abstract=275668 or http://dx.doi.org/10.2139/ssrn.275668

Contact Information

Chandra Kanodia
University of Minnesota - Carlson School of Management ( email )
321 19th Avenue South
674 Management and Economics
Minneapolis, MN 55455
United States
612-624-6880 (Phone)
612-626-7795 (Fax)
Rajdeep Singh (Contact Author)
University of Minnesota - Twin Cities - Carlson School of Management ( email )
19th Avenue South
Minneapolis, MN 55455
United States
612-624-1061 (Phone)
612-626-1335 (Fax)
HOME PAGE: http://umn.edu/~rajsingh
Andrew E. Spero
University of Minnesota - Twin Cities - Carlson School of Management ( email )
19th Avenue South
Minneapolis, MN 55455
United States
(612) 625-8051 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 3,191
Downloads: 479
Download Rank: 29,919
References:  22
Citations:  13

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo6 in 0.328 seconds