Stability of Monetary Unit and Informativeness of Corporate Financial Reporting

Yale ICF Working Paper No. 02-14

22 Pages Posted: 13 May 2002

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: September 2001


Monetary unit is a basic element of accounting used to manage, report, govern and tax organizations in all sectors of the economy. Instability of monetary unit introduces noise, weakening the effectiveness of accounting in performing its important economic roles in society. We model the impact of monetary instability on the accuracy of accounting valuation and consequently on the economics of managing organizations. We also examine some empirically testable implications of the theory. Though the magnitude of this effect remains to be estimated, it may be significant enough to deserve explicit consideration in selection of monetary policy.

Keywords: Stability of Monetary Unit, Corporate Financial Reports, Information

JEL Classification: E31, M41

Suggested Citation

Sunder, Shyam, Stability of Monetary Unit and Informativeness of Corporate Financial Reporting (September 2001). Yale ICF Working Paper No. 02-14. Available at SSRN: or

Shyam Sunder (Contact Author)

Yale University - School of Management ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)


Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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