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Risk in Accounting

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  • Shyam Sunder

Abstract

type="main"> Risk and uncertainty are inherent in the environment and functions of accounting. Accounting reports, systems, norms, and rules help people decide, and also determine how they decide in such an environment. Diverse normative theories and descriptions of coping with risk and uncertainty yield different implications for accounting. Chambers was an articulate, forceful, and celebrated proponent of market values, while Ijiri did the same for historical costs. Elements of accounting theory that diverge in their emphases on historical cost versus market values can be linked to the divergence in the theories of risk and decision making. This largely unrecognized link between the conflicting accounting theories and their respective implicit assumptions about risky decisions may help us reconcile, understand, and progress beyond the accounting debates of the past century.

Suggested Citation

  • Shyam Sunder, 2015. "Risk in Accounting," Abacus, Accounting Foundation, University of Sydney, vol. 51(4), pages 536-548, December.
    • Handle: RePEc:bla:abacus:v:51:y:2015:i:4:p:536-548
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    File URL: http://hdl.handle.net/10.1111/abac.12060
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    References listed on IDEAS

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    1. Sunder, Shyam, 1992. "Market for Information: Experimental Evidence," Econometrica, Econometric Society, vol. 60(3), pages 667-695, May.
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    10. Kachelmeier, Steven J & Shehata, Mohamed, 1992. "Examining Risk Preferences under High Monetary Incentives: Experimental Evidence from the People's Republic of China," American Economic Review, American Economic Association, vol. 82(5), pages 1120-1141, December.
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    13. Friedman, Daniel & Isaac, R. Mark & James, Duncan & Sunder, Shyam, 2014. "Risky Curves: On the Empirical Failure of Expected Utility," Santa Cruz Department of Economics, Working Paper Series qt87v8k86z, Department of Economics, UC Santa Cruz.
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    Cited by:

    1. Stewart Jones & Murray Wells, 2015. "Accounting Research: Where Now?," Abacus, Accounting Foundation, University of Sydney, vol. 51(4), pages 572-586, December.
    2. Saeid Homayoun & Vahid Molla Imeny & Mahdi Salehi & Mahdi Moradi & Simon Norton, 2022. "Which Is More Concerning for Accounting Professionals-Personal Risk or Professional Risk?," Sustainability, MDPI, vol. 14(22), pages 1-13, November.

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