Informational Foundations for the Macroeconomic Role of Aggregated Accounting Disclosures

52 Pages Posted: 27 Mar 2020

See all articles by Gary Lind

Gary Lind

University of Pittsburgh - Joseph M. Katz Graduate School of Business

Date Written: March 3, 2020

Abstract

I show that, consistent with theory, the volume of business transactions increases during good economic states relative to bad (Veldkamp 2005). As more transactions are aggregated in financial reports, the precision of the macroeconomic signal in aggregated accounting information increases, so that accounting reports contain more precise macroeconomic information during good states of the economy when transaction volume is high than bad states when the volume is low (Van Nieuwerburgh and Veldkamp 2006). Lastly, the macroeconomic information dynamics of aggregate earnings follow economic theory: macro content grows throughout good states as agents become more confident and the information environment improves.

Keywords: Disclosure, Externalities, Economic Forecasts, SEC Filings

JEL Classification: E58, G20, M41, M45

Suggested Citation

Lind, Gary, Informational Foundations for the Macroeconomic Role of Aggregated Accounting Disclosures (March 3, 2020). Available at SSRN: https://ssrn.com/abstract=3548176 or http://dx.doi.org/10.2139/ssrn.3548176

Gary Lind (Contact Author)

University of Pittsburgh - Joseph M. Katz Graduate School of Business ( email )

3950 Roberto Clemente Drive
Pittsburgh, PA 15260
United States

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