财务会计理论—Introduction (Student)2015 to print.ppt

* /wgbh/pages/frontline/shows/regulation/view/ Hughes Ayres Hoskin Financial Accounting A valuation Emphasis is a good book 1. Course objectives 2. Course grading and evaluation 3. Class and time schedules: discuss whether you want to shorten the lunch time. 4. Lectures * * Chapter 1 some Chapter 4 and Chapter 13 * E.g. BSC of Chadwick – information about how BSC has implemented in pharmaceutical companies * * Chapter 1 some Chapter 4 and Chapter 13 * * * Use the AJV case * * Relevance versus reliability The best measure of net income to control adverse selection not the same as the best measure to motivate manager performance Investors want information about future firm performance Current value accounting? Good corporate governance requires that managers “work hard” Do historical cost accounting, conservatism better reflect manager effort? * Akerlof (197) The market for lemons: Quality uncertainty and the market mechanism QJE 1970 Akerlof (1970) Signaling is used to alleviate problems caused by information asymmetry. Example: used car market. * The owner knows more about true condition than would a potential buyer. Owner may bring “lemon” to market, get more than it is worth from unsuspecting buyer. Buyers beware = lower the price willing to pay for used car. Some good used cars cannot be sold at reasonable price. Good used car will be less likely to be sold in the used car market. Ultimately all cars sold will be lemons. Nobody will come to market = market failure * Incentives for good ones to distinguish from others (i.e. to signal) to obtain better price. Signaling possible only if it’s cheaper for better one to distinguish herself Example of signaling: offer a warranty (student: choosing CUHK) * Information asymmetry (IA): securities markets subject to IA problems - insider info and trading. Insiders know more about the company Adverse selection: insiders adverse to interests of investors. Investors lower the amounts they would pay