Unbiased Accounting Considering Profitability

53 Pages Posted: 1 Apr 2011 Last revised: 20 Dec 2011

See all articles by Martin Staehle

Martin Staehle

University of Bern - Institute for Accounting

Niklas Lampenius

University of Hohenheim - Faculty of Business, Economics and Social Sciences

Date Written: June 15, 2011

Abstract

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.

Keywords: Unbiased accounting, neutral accounting, value accounting, conservative accounting, conservatism in accounting, fair value, historic cost, economic accounting, steady state analysis

JEL Classification: M41, M48

Suggested Citation

Staehle, Martin and Lampenius, Niklas, Unbiased Accounting Considering Profitability (June 15, 2011). Available at SSRN: https://ssrn.com/abstract=1800048 or http://dx.doi.org/10.2139/ssrn.1800048

Martin Staehle (Contact Author)

University of Bern - Institute for Accounting ( email )

Switzerland

Niklas Lampenius

University of Hohenheim - Faculty of Business, Economics and Social Sciences ( email )

Stuttgart, 70593
Germany

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