The Relevance/Irrelevance Issue

In: Business and Management

Submitted By boyeecheng
Words 15491
Pages 62

(Global Business & Economics Review Volume 5 No.2 December 2003 pp:140-175) Stanley C. W. Salvary, Canisius College

ABSTRACT Some current research conclude that the numbers in financial statements are not relevant for three basic reasons. The numbers: (1) are not isomorphic with capital market values, (2) do not have a future orientation, and (3) are un-interpretable since they are based upon five different measurement attributes. The lack of isomorphism argument is invalid since actual current performance is not identical with the capital market expectations of future performance. The lack of a future orientation argument is invalid since financial statements capture what has happened and not what is expected to happen. Since a single measurement attribute is required to produce meaningful measures, the un-interpretability argument holds. A unique measurement attribute is identified in this paper to address this problem


In Statement of Financial Accounting Concepts No. 1: Objectives of Financial Reporting by Business Enterprises (SFAC1) [1978], the Financial Accounting Standards Board (FASB) maintains that the function of financial accounting is to generate information useful to a group of users (investors and creditors) for decision-making. The focus on that specific function (decision-making) leads to a concern for predictive value, as opposed to feedback value, in financial statements. This focus has questioned the relevance of the information contained in financial statements for investors’ prediction of the securities market values/stock prices and has ushered in and perpetuated a line of research that views capital market valuation as the basis for determining the numbers to be incorporated in financial statements. However, the relevance of the financial statements…...

Similar Documents

Theorretical Relevance

...Rachelle Jobe Dr. Spritz April 5th, 2012 1. Theoretical Relevance a. The entry I chose to report on was in the Psychology subfield of the social sciences, more specifically child development as it pertains to psychological studies. b. The hypothesis of the author as stated in the entry was to determine if the increased study of sight words improve 3rd grade students’ transfer of correct spelling in their independent writing. 2. Research Methods a. What are the main variables in this study? In other words, the researchers are examining whether differences in the use and study of sight words (independent variable) are related to students’ writing (dependent variable). b. There did not appear to be any concern of confounding variables in this study. c. The researcher tested a group of 3rd graders for their spelling knowledge in their independent writing and from the students that scored the lowest, she selected 6 students. Over 12 weeks, the researcher worked with the students using a variety of study methods to help teach the students sight words. The first 2 weeks the students learned the words by flashcards. The next 2 weeks the students learned the words by games, the following 2 weeks the students learned the words by building them with magnetic tiles, the next 2 weeks the students wrote the words in rainbow colors. The following week the students built the words out of shaving cream and the final week the......

Words: 372 - Pages: 2

Relevance of Home

...on absurd humor beginning from 1997 have been acclaimed as ‘many years before their time’. I have to be an entertainer as well as play the role of the filmmaker and the scholar -- all at one time. Thus my lecture could showcase storytelling of films in this fashion, through humor, even dancing, mimicry and juxtapositioning of images from the east and the west. The legend of Amitabh Bachchan has finally arrived in the West -- now teaming up with mega star Leonardo Di Carpio and Anil Kapoor with Tom Cruise. This is not the reason why I want to delve into Indian films. My background of growing up in a filmmaking family in the flux of Mumbai has etched resonances that are not only rich but far reaching. I would like to explore the issue of ‘home’ and ‘family’ in some of the films e.g. Pati Patni aur Woh, Souten, Arth, Is Raat ki Subah Nahin (the film I started out as an actor, which is a pioneering film for the resurgence of alternate cinema and the mafia genre), Agar Tum Na Hotay, Muqaddar ka Sikandar, Khuda Gawah, Kabhi Kabhi, Silsila, Dilwale Dulania Ley Jayengay, Monsoon Wedding, Satya, Sahib Bibi aur Ghulam, Mr and Mrs 55, Darr and the exception here being Devdaas. Hindi films has been riding smoothly on the love triangle since the fifties till date, but it seems that only now, since cinema has become global, that like the West, our films are taking a realistic turn, where like the west relationships, home and family are broken up, because of the......

Words: 1788 - Pages: 8

Partnership and Its Relevance in Bangladesh

... Partnership and it’s relevance in Bangladesh Introduction Since humans are social beings, partnerships between individuals, businesses, interest-based organizations, schools, governments, and varied combinations thereof, have always been and remain commonplace. In the most frequently associated instance of the term, a partnership is formed between one or more businesses in which partners (owners) co-labor to achieve and share profits and losses (see business partners). Partnerships exist within, and across, sectors. Non-profit, religious, and political organizations may partner together to increase the likelihood of each achieving their mission and to amplify their reach. In what is usually called an alliance, governments may partner to achieve their national interests, sometimes against allied governments who hold contrary interests, such as occurred during World War II and the Cold War. In education, accrediting agencies increasingly evaluate schools by the level and quality of their partnerships with other schools and a variety of other entities across societal sectors. Partnerships also occur at personal levels, such as when two or more individuals agree to domicile together, while other partnerships are not only personal but private, known only to the involved parties. Partnerships present the involved parties with special challenges that must be navigated unto agreement. Overarching goals, levels of give-and-take, areas of responsibility, lines of authority and......

Words: 4442 - Pages: 18

Relevance of Accounting Information

...period. One-time, non-recurring expensed charges can quickly distort a company’s income for the accounting period. Companies must ensure this information is relevant prior to release for review by external business stakeholders.InventoryRelevant accounting information can also help business owners make decisions regarding inventory cost. The inventory cost is relevant because it represents the money a business owner must pay to purchase direct materials for producing goods. Business owners may purchase inventory to resell in a retail business environment. Relevant costs include what companies must pay right now to replace current inventory. Business owners must also pay attention to any volume discounts which can change the relevance of inventory costs.ConsiderationsBusiness owners should also be sure accounting information is accurate and timely. Accurate accounting information ensures all financial information is recorded properly on the company’s accounting ledger. Timeliness refers to accounting information recorded in the proper accounting period. Most small businesses record financial transactions on a monthly basis. Including financial information from previous or subsequent months can distort the current accounting period’s information.Seeking HelpSmall business owners who are unfamiliar with the accounting process should seek outside help or information to learn about accounting. Business owners can take a class at a local......

Words: 8418 - Pages: 34

Value-Relevance of Income Components

...European Journal of Economics, Finance and Administrative Sciences ISSN 1450-2275 Issue 44 (2012) © EuroJournals, Inc. 2012 Relevance of Income Levels and Income Components for Determining Firm Value Hashem Valipour Assistant Professor, Accounting Department, Firouzabad Branch Islamic Azad University, Firouzabad, Iran Tel: 00989173086986 E-mail: Alireza Shahabi Accounting Department, Marvdasht Branch Islamic Azad University, Marvdasht, Iran E-mail: Javad Moradi Assistant Professor, Accounting Department, Marvdasht Branch Islamic Azad University, Marvdasht, Iran E-mail: Abstract Income levels and its components which are presented in income statement, are the first criteria for assessing financial operation, users are quite interested in this criterion. So investigating the effect of this attraction on firm value is important. The present paper studies this matter. Statistical population is listed companies in Tehran Stock Exchange (TSE). Based on considered preconditions 49 companies selected over 1999 to 2008 and classified into three groups based on their size, small, medium and large. Regression has used for analyzing data. Findings indicate that income level and components prepare relevant information for users. Other findings show that considering firm size has negligible impact on value relevance of income level and components. Keywords: Income Statement,......

Words: 4511 - Pages: 19

Relevance of Psychology to the Business Operator

...Is psychology of any relevance to business administrators or managers? If yes justify your answer and if no justify your answer. Yes, psychology is of relevance to business administrators or managers. Psychology was coined in the 16th century from 2 Greek words. Psukhe/psyche which means “breath” or “soul” and logos which means “word” or “reason” and its initial meaning was “study of the soul”. Later the definition changed to “science of mental life” when it became a science in 1879. Also in the 1920s it was commonly defined as “the scientific study of behavior”. From the 1960s till date it has taken a broader definition “the science of behavior and mental processes. Psychology also refers to the application or usage of understanding knowledge and skills to a number of areas of human activity, involving issues concerning with daily activities such as education, events, people and their task, employment, association, relationship as well as the treatment of mental-health problems. Importance of psychology Psychology is important as it is concerned with the study of behavior and mental processes and at the same time, it is also applied to many different areas of human life. Everything we do is very much related to psychology. Psychology primarily studies who and what we are, why we are like that, why we act and think like that and finally how we can improve ourselves. Psychology is important in many different ways. For example, there have......

Words: 1033 - Pages: 5

Position Paper on Relevance of It

...Position Paper on Relevance of Information Technology Information technology has undoubtedly become an indispensable part of our day to day lives. Both the articles considered for analysis projects the role of IT, from being the back-bone of commerce to handling huge volumes of data, as being highly significant in the modern world. Even though both Nicholas Carr and Erik Brynjolfsson are in agreement to the omnipresence of IT, their perception of the future of IT differs vastly. I am in accordance with the school of thought put forth by Nicholas Carr which believes that the strategic value of IT has reduced. For all the inventions that had revolutionized the world there has been a point where these inventions become inevitable and hence highly available which leads the users to take the same for granted. In Carr’s article he explains this phenomenon using the examples of railroads and electrical power systems. He classifies technology broadly into two categories – Proprietary and Infrastructural. It has been proved over the course of time that IT services which used to be available only to the elite few has become commoditized hence making it an infrastructural technology. An infrastructural technology used by a company doesn’t give it any edge over their rivals but it’s the proprietary technology that does. Hence the relevance of IT as a medium to fight competition has declined. Mismanagement of data has been discussed in both the articles and that the company can gain......

Words: 655 - Pages: 3

Relevance of Corporate Governance

...KCA UNIVERSITY NAME: ROBERT WALIAULA MASAMBU REGISTRATION NO: 13/03174 MBA (PROCRMENT) COURSE: CORPORATE GOVERNANCE QUESTION: RELEVANCE OF CORPORATE GOVERNANCE TO A MODERN COMPANY SUBMITTED TO: DR. ONGORO LIST OF ACRONYMS: OECD: Organization for Economic Co-operation and Development QUESTION: DISCUSS THE RELEVANCE OF CORPORATE GOVERNANCE TO THE MODERN COMPANY INTRODUCTION Corporate governance has reached centre-stage in the global agenda. The principles and codes evolved in several countries have furthered the cause of efficiency, transparency and equity particularly in the interest of the shareholders. Sustainable shareholder value has become the mantra for corporate immortality translating eventually into welfare of the society. Corporate governance is based on the relationship between agents and principals (agency theory). Agency theory explains how best the relationship between agents and principals can be tapped for purposes of governing a corporation to realize its goals. The owners of capital (shareholders) are the principals while the agents are the managers. The principals select and put in place both governors (directors) and auditors and ensure effective governance system is implemented whereas the managers are responsible for the day to day operations. Therefore corporate governance involves the way in which the boards oversee the running of a company by its managers and how......

Words: 1845 - Pages: 8

The Value and the Relevance of Tourism Industry

...(Fletcher, Fyall, Gilbert and Wanhill 2013: preface). In fifty years, the number of tourists has increased from 25 million in 1950 to 702 million in 2000. Today, the tourism industry represents more than a third of the whole world trade of services. Indeed, tourism accounted for 9 % of GDP and 1 in 11 global jobs. Over the past decade, the rate of international tourism increased by 4% on average, per year. By 2019, the World Tourism Organization expects that the sector will account for 10% of GDP, 1 in 10 global jobs and will supply 296 million jobs at the world level. These figures make it clear that the tourism industry has now become a major economic sector in its own right. From these findings, it is possible to discuss the value and relevance of tourism today. In this essay, it is possible to ask if the changes that tourism creates can be either positive or negative, from an economic, social and environmental perspective. The economic impacts of the tourism industry Tourism contributes significantly to the economies of countries, ensuring their income and a measure of prosperity. In addition, it can “help to eliminate the widening economic gap between developed and less developed countries and regions and to ensure the steady acceleration of economic and social development, in particular in developing countries” (Sharpley R. and Telfer D.J. 2002: p.81). Of course, these terms vary according to the scale of each country. For emerging countries, tourism may prove to......

Words: 1801 - Pages: 8

Feminism and Its Relevance in Today’s Society

...Feminism and its relevance in today’s society Diamond V Nesbit ITT-Technical Institute When you hear or read the term feminism what image pops into your mind? Is it a woman with a short haircut, unshaven legs and/or armpits, over-weight by at least 20 pounds, a strong hatred of men and all things pertaining to men? Well this could be due to the image society burns into your mind. When watching television or browsing on the internet you cannot help but run across an image of angry women with picket signs automatically placing the group in a negative light. Feminism is more than picket signs, protests, and unshaven legs. Feminism is a collection of movements and ideologies aimed at defining, establishing, and defending equal political, economic, and social rights for women. This includes seeking to establish equal opportunities for women in education and employment. Feminism is frown upon in today’s society but is still very relevant and important to many. The media and feminism have a love/hate relationship. In movies, books, and even cartoons feminist are portrayed as angry, unkempt, lesbian “man haters”. They are shown looking down on men and judging women for their attire or life choices. On rare occasions the media actually shines a positive light on feminism and its beliefs only when it can be beneficial to its rating or purpose. The feminist agenda is not about equal rights for women," said Pat Robertson, a television evangelist and former Baptist minister during...

Words: 1695 - Pages: 7

Relevance Lost

...RELEVANCE LOST (DISCUSSIE EN ONTWIKKELINGEN) Relevance lost is a title of the book written by Johnson and Kaplan, where they were complaining that management accounting techniques emerged centuries ago, are still used, but they no longer relevant in today’s highly competitive environment. CHAPTER 5 - CONTROLLING THE MULTI DIVISIONAL ORGANIZATION  64. What are the two major obstacles to the success of the integrated firm?   
    1. Complexity - or the bureaucratic paralysis caused by complexity. 
    2. Management indifference to the owner's goals (p.94). This potential problem resulted when managers replaced owners in performing the managerial functions. 65. How did the integrated firms cope with these problems? Multi divisional firms might have developed better accounting systems, (e.g., using Church's ideas) but instead they coped with these obstacles using decentralization (p.94-96). In decentralized firms, top management plans strategy, while subordinate managers coordinate and control operating activities (p.97). 66. What was the New Use Developed For ROI? J&K indicate that ROI was used to delegate responsibility and allocate funds, i.e., capital (p.98). (Note: Technically, responsibility can be assigned, but not delegated. The authority to act on one's behalf can be delegated as when someone is hired to do a tax return, but the taxpayer is still responsible.) 67. Success of multi divisional firms depends on the management accounting system to perform three......

Words: 14722 - Pages: 59


...The following paper will examine the short film “Our World” from the Responsibility Project featuring singer John Legend. Specifically, the paper will provide insight into the organizational issue of education and how ethical principles, external social pressures, relevance of organizational, and personal decisions affect this societal problem. Why are the issues in the film important? The issues with this film center on our ailing educational systems in and around low income, poverty stricken inner cities throughout the United States. Ensuring each child receives a quality education regardless of ethnicity or social background is extremely important issue. John Legend is using his success and resources to address these exact concerns within the political arena in Washington. What role do external social pressures have in influencing organizational ethics? External social pressures can steer organizational ethics, both in negative and positive manner. For example, as John Legend highlights society (external social pressure) tends to have several per-conceived notions on inner city education activities. One such negative notion is poor black, white or Hispanic children will not do well within the education system because of the influence of the geographical area, standards of living, and the lineage of their parents so we should just give up on them because they will not do well. Additionally, recent political initiatives (external social pressures) from the......

Words: 265 - Pages: 2

"The Concept of Relevance in the Law of Evidence Is Not as Straightforwad as It Appears to Be." Discuss

...CONCEPT OF RELEVANCE IN THE LAW OF EVIDENCE IS NOT AS STRAIGHTFORWAD AS IT APPEARS TO BE.” DISCUSS It is difficult to spell out a straightforward definition of the concept of relevance (Tapper, p71). In the R v Nethercott case, it was held that any two facts to which the concept of relevance is applied are so related to each other that according to the common course of events, one either taken by itself or in connection with other facts, proves or renders probable the past, present or future existence or non-existence of the other. According to Lord Simon in DPP v Kilbourne, “Evidence is relevant if it is logically probative of some matter which requires proof… It is sufficient to say … that relevant (that is, logically probative or disprobative) evidence is evidence which makes the matter which requires proof more or less probable” (Allen, p8). Essentially, relevant evidence is that which makes the matter requiring proof more or less probable. In this sense, relevance is arguably an absolute concept, as proof of one fact either makes the existence of another more probable, or it does not. Notwithstanding, relevance is often regarded as variable, just as evidence can be regarded as more or less relevant. Zuckerman describes relevance as “having a contextual and dynamic nature”, and the relevance of one fact to another can be judged on its own or in connection with other facts (Zuckerman, p46). This seems to relate more to the cogency of the evidence, given its......

Words: 2150 - Pages: 9

Relevance of Free Will in the Criminal Justice

...Relevance of Free Will in the Criminal Justice System Ja’Nea M. Jenkins North Carolina Central University According to the Merriam-Webster’s dictionary, free will is the freedom of humans to make choices that are not determined by prior causes or by divine intervention. However, free will is the power of self-determination; one’s ability to choose between courses of action is not completely determined by circumstances. The author personally believes that all human beings have free will; however, this particular issue has become a debate over the years among other authors. Cotton inferred that the criminal law is based on the idea that an individual is responsible for their own actions unless the force was out of their control (Cotton, 2005). Every person has the right to make choices at their own free will; unless someone is threatening another or using force to harm them. In 1988, the court case, Smith v. Armontrout states that the Supreme Court expresses the fact that a “universal and persistent” element of our law the “belief in freedom of the human will and a consequent ability and duty of any normal individual should have the ability to distinguish the difference between good and evil” (Cotton, 2005). Whether or not any human being influences another to act a particular way in violation of the law when the individual knows the difference between right and wrong, both of them should be responsible, due to free will. The allegiance of courts and legislatures to......

Words: 741 - Pages: 3

The Relevance of Peacemaking Criminology

... The Relevance of Peacemaking Criminology David Esposito Troy University Abstract The realm of peacemaking criminology rests within the social conflict theories. Peacemaking criminology is a perspective that seeks ending crime through transformative and restorative justice methods to help people create peaceful solutions to crime. Peacemaking criminology can be implemented in society to focus on healing families currently touched by crime. The implementation of peacemaking criminology would be a profoundly different approach in effort to break a cycle that repeats itself in the way society currently operates. One can examine research already available and the effectiveness of current programs with similar goals and then determine their effectiveness and merit to invest time and money. The fundamental goal of peacemaking criminology is to use a non-violent methodology to solve crime. The Relevance of Peacemaking Criminology Peacemaking criminology is definitely not mainstream criminology and has only emerged in the last quarter century, as revealed in the publication of Harold Pepinsky and Richard Quinney’s edited reader titled Criminology as Peacemaking (Barnes, nd). The overall argument offered by the Pepinsky and Quinney writers is that the whole of the American criminal justice system is predicated on the continuance of violence and oppression and the failure to explain for how the larger social system impacts the problem of crime (Aday, 1992). One would contend......

Words: 2213 - Pages: 9

na peru surya 2018 hindi | Sigaretta elettronica Atomizzatori | Turnbeutel Cars Frozen Schneekönigin Marvel Schneewittchen Sporttasche Kinder