Economic Theory of Financial Reporting Regulation

Authored by: John Christensen , Hans Frimor

The Routledge Companion to Accounting, Reporting and Regulation

Print publication date:  September  2013
Online publication date:  October  2013

Print ISBN: 9780415625739
eBook ISBN: 9780203103203
Adobe ISBN: 9781136243509


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The purpose of accounting is to provide information to decision makers engaging in all kinds of economic decisions. The regulation of accounting is associated with the use of accounting information for parties which are external to the firm. The demand from internal users requires no regulation, as the information can be tailored to the purposes of accounting information. Accounting can be viewed as an economic good and consequently, like any other good, the demand for accounting can be analyzed using the tools of economics. Accounting is not consumed directly and thus it is only a derived good. The demand for accounting is derived from its usefulness in economic decision-making. For this reason, we will use economics to analyze the demand for accounting regulation. We will consider both the decision and the control purpose of accounting.

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