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Is Accounting an Information Science?

Author

Listed:
  • Fellingham John

    (Ohio State University, Columbus, USA)

  • Lin Haijin

    (University of Houston, Houston, USA)

Abstract

The central result is an equality connecting accounting numbers with information. ln1+incomeassets=rf+IX;Y\ln \left( 1+\frac{income}{assets}\right) =r_{f}+I\left( X;Y\right), rfr_{f} is the risk free rate, lnln is the natural logarithm, YY is the outcome of interest, XX is the information signal about YY, and I(X;Y)I(X;Y) is a Shannon information measure. The equality is derived using economic income accounting; it is shown to hold, under appropriate conditions, for declining balance and straight line depreciation methods. Some social welfare implications are explored.

Suggested Citation

  • Fellingham John & Lin Haijin, 2020. "Is Accounting an Information Science?," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 10(1), pages 1-17, March.
    • Handle: RePEc:bpj:aelcon:v:10:y:2020:i:1:p:17:n:1
    DOI: 10.1515/ael-2016-0026
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    References listed on IDEAS

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