Given that creditors and investors use financial reports to allocate resources among companies, supervisors obviously care about these reports portray performance and the financial well-being of their company. Supervisors influence financial reports chiefly through their choices about the business's business transactions and commercial preparations.
A question naturally arise as to if the standards that regulate financial reporting influence managers' decisions about arrangements and company transactions. That is, do financial reporting standards have economic consequences that are unintended by altering the decisions that managers would have made in the absence of standards? Moreover, should standard setters, such as Financial Accounting Standards Board (FASB), contemplate the effects of financial reporting standards on managers' economic decisions? In this post, we provide some history on these issues, describe why managers' decisions may be impacted by accounting standards, provide examples of possible effects of accounting standards on supervisors' choices, discuss conclusion of academic research on these issues and, finally, offer our opinions on these questions.
Union Corrugating Co., Video Supplement Case Study Solution
Unintended Economic Implications of Financial Reporting Standards Case Study Solution
PUBLICATION DATE: September 15, 2008 PRODUCT #: BH289-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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