Discussion of On the Stewardship and Valuation Implications of Accrual Accounting Systems

摘要

Financial accounting information serves heterogeneous demands by various decision makers. Three notable demands for the use of financial accounting information are for valuation of firms, for contractual agreements between shareholders and management, and for debt contracting. The extant theoretical literature, as well as most of the empirical literature, suggests that different accounting systems are optimal for facilitating the various sources of demand for accounting information. Such a conflict poses a challenge for regulators when designing financial reporting standards.