Statistical Studies of Financial Reports and Stock Markets
Journal of Capital Markets Studies, Vol. 1 Issue: 1, pp.5-9, doi: 10.1108/JCMS-10-2017-006
6 Pages Posted: 12 Dec 2017
Date Written: July 17, 2017
Purpose – The purpose of this paper is to examine the usefulness of statistical studies of financial reports and stock market data for improving corporate financial reports.
Design/methodology/approach – Analytical writing.
Findings – It is often claimed that statistical studies of co-variation between financial and stock market data can help set better financial reporting policy. Such co-variation, even when it can be estimated, tells us little about which financial reports help to make better financial decisions. A case in support of such claims remains to be made.
Practical implications – The readers are advised to be extremely careful in drawing inferences from studies of co-variation between accounting and stock market data for financial reporting policy.
Social implications – Inference from accounting empirical studies to policy needs better rationale to avoid bad policy consequences.
Originality/value – This paper raises original questions about policy inferences from a large class of empirical research in accounting.
Keywords: Efficient markets, Financial reporting policy, Statistical co-variation
JEL Classification: M41
Suggested Citation: Suggested Citation