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Accounting Disclosure and Real Effects

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  • Kanodia, Chandra

Abstract

In this paper I advocate and illustrate a new approach to the study of accounting measurement and disclosure that is strikingly different from the usual studies of disclosure in pure exchange economies. This new approach studies the "real effects" of accounting disclosure, arguing that how accountants measure and report firms' economic transactions, earnings and cash flows to capital markets has strong effects on firms' real decisions and on resource allocation in the economy. I explicitly study the real effects of accounting for firms' intangible investments and accounting for firms' derivatives/hedge activities. I also shed new light on more fundamental accounting issues such as the real effects of imprecision in accounting measurement and the real effects of periodic performance reporting. Studies of real effects have the potential to inform accounting policy debates since they are built around very specific economic transactions and their accounting treatment.

Suggested Citation

  • Kanodia, Chandra, 2007. "Accounting Disclosure and Real Effects," Foundations and Trends(R) in Accounting, now publishers, vol. 1(3), pages 167-258, October.
    • Handle: RePEc:now:fntacc:1400000003
    DOI: 10.1561/1400000003
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    Citations

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    Cited by:

    1. Tong Lu & Konduru Sivaramakrishnan & Yanyan Wang & Lisheng Yu, 2021. "The Real Effects of Mandatory Corporate Social Responsibility Reporting in China," Production and Operations Management, Production and Operations Management Society, vol. 30(5), pages 1493-1516, May.
    2. Wei Chen & Hun‐Tong Tan & Elaine Ying Wang, 2013. "Fair Value Accounting and Managers' Hedging Decisions," Journal of Accounting Research, Wiley Blackwell, vol. 51(1), pages 67-103, March.
    3. Scott D. Dyreng & Jeffrey L. Hoopes & Jaron H. Wilde, 2016. "Public Pressure and Corporate Tax Behavior," Journal of Accounting Research, Wiley Blackwell, vol. 54(1), pages 147-186, March.
    4. Downar, Benedict & Ernstberger, Jürgen & Reichelstein, Stefan & Schwenen, Sebastian & Zaklan, Aleksandar, 2021. "The impact of carbon disclosure mandates on emissions and financial operating performance," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 26(3), pages 1137-1175.
    5. Elaine Ying Wang & Hun‐Tong Tan, 2013. "The Effects of Guidance Frequency and Guidance Goal on Managerial Decisions," Journal of Accounting Research, Wiley Blackwell, vol. 51(3), pages 673-700, June.
    6. Yoon, Dae-Hee, 2018. "Strategic delegation, stock options, and investment hold-up problems," Accounting, Organizations and Society, Elsevier, vol. 71(C), pages 1-14.
    7. Caballé, Jordi & Dumitrescu, Ariadna, 2020. "Disclosure of corporate tax reports, tax enforcement, and price information," Journal of Banking & Finance, Elsevier, vol. 121(C).
    8. Xu Jiang & Baohua Xin & Yan Xiong, 2023. "The Value of Mandatory Certification: A Real Effects Perspective," Journal of Accounting Research, Wiley Blackwell, vol. 61(1), pages 377-413, March.
    9. Pingyang Gao & Pierre Jinghong Liang, 2013. "Informational Feedback, Adverse Selection, and Optimal Disclosure Policy," Journal of Accounting Research, Wiley Blackwell, vol. 51(5), pages 1133-1158, December.

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