Risk in Accounting

14 Pages Posted: 22 Aug 2015

See all articles by Shyam Sunder

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

Multiple version iconThere are 2 versions of this paper

Date Written: August 5, 2015


Risk and uncertainty are inherent in the environment and functions of accounting. Accounting reports, systems, norms, and rules help people decide, and also determine how they decide in such environment. Diverse normative theories and descriptions of coping with risk and uncertainty yield different implications for accounting. Chambers was an articulate, forceful, and celebrated proponent of market values, while Ijiri did the same for historical costs. Elements of accounting theory that diverge in their emphases on historical cost versus market values can be linked to the divergence in the theories of risk and decision making. This largely unrecognized link between the conflicting accounting theories and their respective implicit assumptions about risky decisions may help us reconcile, understand and progress beyond the accounting debates of the past century.

Keywords: Chambers, risk and uncertainty, financial reporting, accounting, information for decisions

JEL Classification: D81, M41

Suggested Citation

Sunder, Shyam, Risk in Accounting (August 5, 2015). Available at SSRN: https://ssrn.com/abstract=2648474 or http://dx.doi.org/10.2139/ssrn.2648474

Shyam Sunder (Contact Author)

Yale University - School of Management ( email )

165 Whitney Avenue
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203-432-6160 (Phone)

HOME PAGE: http://www.som.yale.edu/faculty/sunder/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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