On the social value of accounting objectivity in financial stability

  title={On the social value of accounting objectivity in financial stability},
  author={Pierre Jinghong Liang and Gaoqing Zhang},
  journal={The Accounting Review},
ABSTRACT In this paper, we analyze the social value of accounting objectivity in maintaining financial stability. Building on an early influential accounting study by Ijiri and Jaedicke (1966), we ... 

Figures from this paper

The impact of accounting conservatism on financial stability: an empirical study on a sample of Iraqi banks

  • S. Mohammed
  • Business
    Tikrit Journal of Administrative and Economic Sciences
  • 2022
The aim of the research is to know the effect of accounting conservatism (AC) on the financial stability of a sample of (10) Iraqi banks for the period from 2010 to 2019, as unconditional accounting

Competition and Opacity in the Financial System

This paper studies the effect of competition on opacity in the financial system. In my model, two financial institutions competing for investors simultaneously make a public disclosure decision when

Fair Value Accounting, Illiquid Assets, and Financial Stability

Prudential regulation of financial institutions relies on asset values measured based on accounting standards. This paper examines how this regulation affects financial institutions' incentives to

Accounting and the Financial Accelerator

We extend the general equilibrium economy of Holmstrom and Tirole (1997) to optimal reporting of productive assets and examine when the accounting process can contribute to financial acceleration.

Optimal Comparability, Relative Accounting Performance, and Real Effects

This paper examines how accounting comparability affects investment efficiency and risk-allocation in the economy. We develop the statistical and informational properties of accounting reports under

Decision Facilitating Information and Induced Volatility: A Study of Tradeoffs in Accounting Disclosure

Corporate managers often express concern about accounting induced volatility in financial statements.  Accounting regulators, however, argue that the volatility in financial statements merely

Reporting Rules in Bank Runs

We study the role of reporting rules in the context of bank runs. In our model, a financial institution receives an early but imprecise estimate of the performance of its investment and issues a

Epistemological aspects of the economic control

  • G. Galassi
  • Economics
    De Computis - Revista Española de Historia de la Contabilidad
  • 2019
Epistemology is essential for probing the fundamental issues of the management sciences, included the ‘economic control process’. The paper aims to highlight the connections between economia

Interplay between Accounting and Prudential Regulation

We develop a model in which accounting information and prudential regulation interact to affect banks' incentives to originate loans. Prudential regulators impose capital requirements to prevent

Differential equation model of financial market stability based on big data

  • Lin Hao
  • Economics
    Applied Mathematics and Nonlinear Sciences
  • 2021
Abstract The financial system is a complex, nonlinear chaotic dynamic system caused by its operating mechanism. Therefore, the application of previous forecasting models cannot explain the existence



A two-step representation of accounting measurement

An essay is presented which focuses on a two-step representation of accounting measurement and shows that it can improve one's understanding of accounting's institutional features. The first step

Deciphering the Liquidity and Credit Crunch 2007-08

This paper summarizes and explains the main events of the liquidity and credit crunch in 2007-08. Starting with the trends leading up to the crisis, I explain how these events unfolded and how four

The Evolution of a Financial Crisis: Collapse of the Asset-Backed Commercial Paper Market

This paper documents “runs” on asset-backed commercial paper (ABCP) programs using a novel dataset of all transactions in the U.S. market during its severe contraction in 2007. We find that one-third

Reporting Discretion, Market Discipline, and Panic Runs

This paper investigates the economic consequences of a financial institution’s reporting discretion in the context of bank runs. A fundamental-based run imposes market discipline on insolvent

Rating Banks: Risk and Uncertainty in an Opaque Industry

The pattern of disagreement between bond raters suggests that bank and insurance firms are inherently more opaque than other firms. Moody's and Standard and Poor's split more frequently over these

Reliability-Relevance Trade-Offs and the Efficiency of Aggregation

This paper studies how an accountant's method of aggregating information in a financial report is affected by differences in the reliability and relevance of components of the report. We study a firm

Should regulators reveal information about banks

Regulators collect and produce information about banks. This information helps regulators monitor the safety and soundness of the banking system, and it also helps policymakers preserve financial

Mark-to-Market Accounting and Liquidity Pricing

When liquidity plays an important role as in times of financial crisis, asset prices in some markets may reflect the amount of liquidity available in the market rather than the future earning power

The Market Reaction to the Disclosure of Supervisory Actions: Implications for Bank Transparency

Abstract We examine the stock market reaction to announcements of formal supervisory actions. We find that the variation in the quality and timeliness of disclosure by U.S. banks explains much of the