Analytical essays on the economic consequences of financial accounting standards.

摘要

The main theme of this dissertation is the idea that, in settings where there is information asymmetry between firms and outside investors regarding certain parameters of the firm's wealth-generating process, and where accounting information does not necessarily reflect the underlying economics of the firm, managers may face a tradeoff between maximizing the firm's perceived value and maximizing its economic value. This idea is explored in two analytical essays. In the first essay,"A Model of Hedge Accounting," we investigate the nature of the alleged economic consequences of the absence of a special accounting treatment for hedges. More specifically, we demonstrate that under descriptive assumptions regarding the information available to market participants, the inability to use hedge accounting typically leads to less hedging than would otherwise be optimal. In the second essay,"A Rationale for the Conservatism Concept in Financial Reporting," we consider a setting in which the limited informativeness of certain accounting regimes makes it necessary for some firms to engage in the economically suboptimal sale of assets, in order to fully reveal the value of those assets to outside investors. When transaction and auditing costs are considered socially wasteful, we find conditions under which a conservative accounting regime involves strictly lower deadweight cost than both a market value regime and a historical cost regime.