The results of the empirical research reported herein suggest that the consistency exception opinion does not appear to have information content for most investors. Investors either do not or are unable to deal with the subtle differences in the quality of the accounting data tested in this research. Some evidence which suggests that investors do utilize materiality criteria in examining data was found. The weakness of the evidence, however, makes this conclusion suspect. The evidence concerning the perceived information content of annual reports is mixed. In examining the annual report price profile, one finds no statistical significance on a weekly basis and infers no information content. This is consistent with the fact that other data sources may preempt the data disclosed through the annual report medium. Yet, on further examination of the annual report price profile, one finds an unusual plateau which suggests information content. Additional research is needed to provide a more definitive answer in this area. Based on the evidence presented in this study, the current burgeoning empirical interest in what data investors need and how investors use data should receive increased impetus.

ABSTRACT: Estimating market values of assets in absence of an observable market price is a problem that arises often in accounting practice. Examples in the areas of taxation, capital budgeting, current cost accounting, and accounting for leases are discussed herein. A usable valuation scheme for such assets is derived from a modification of the popular two-parameter capital asset pricing model. Indirect empirical evidence is presented which suggests that the valuation scheme yields superior predictions to two competing schemes which have been advanced in the literature: indexing and earnings capitalization. In addition, limitations of the valuation scheme are discussed.

Reviews the book "Risk and Uncertainty in Accounting and Finance," edited by John P. Dickinson.

ABSTRACT: The impact of accounting earnings data on bond price behavior is examined for 85 bond issues over the period 1968-1972. Essentially, the study's results indicate that for convertible bonds, certain inferences drawn from stock market research may be extrapolated to this segment of the bond market. That is, accounting data appear to have information content for this market. The study's results concerning nonconvertible bonds indicate that accounting earnings data is incorporated in prices of nonconvertibles, but in a more diffused fashion.