Historical cost, Valuation

Prior to a comprehensive attempt to resolve many financial accounting controversies existing in United States,' more about interaction of accounting data with decisions made by known users of that data is needed. An attempt to acquire additional would be in line with implied decision-making criterion in American Accounting Association's statement that accounting is the process of identifying, measuring and communicating economic to permit informed judgments and decisions by users of information (emphasis supplied).2 In past few years, a number of accounting researchers have used behavioral field experiments as a means of investigating relationship between changes in methods used to gather and present financial accounting data and decisions made by specific users of that data.3 These researchers have generally concluded that decisions made by

M. Edgar Barrett, [Discussion of Accounting for Intercorporate Investments: A Behavior Field Experiment]: A Reply, Journal of Accounting Research, Vol. 9, Empirical Research in Accounting: Selected Studies 1971 (1971), pp. 79-92

Journal Article Corporate Taxation and Dividend Behaviour—A Comment Get access M. A. King M. A. King University of Cambridge Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 38, Issue 3, July 1971, Pages 377–380, https://doi.org/10.2307/2296390 Published: 01 July 1971

Journal Article Clontarf Revisited Get access W. M. Gorman W. M. Gorman Search for other works by this author on: Oxford Academic Google Scholar The Review of Economic Studies, Volume 38, Issue 1, January 1971, Page 116, https://doi.org/10.2307/2296629 Published: 01 January 1971

Stallman investigated the effect of allocating or not allocating common costs as these allocations are reflected in divisional income calculations. Questionnaire packets, containing two sets of corporate data and a request for numerous judgments, were sent to a random sample of members on the rosters of the Financial Analysts Federation and the Institute of Chartered Financial Analysts. A total of 121 respondents provided analytically usable data (for a response rate of 11.33 percent). With regards to the sample, McDonald suggested that, if the experiment is repeated, some less sophisticated inventors should be included. 2 The reported results were based on the respondents' judgments of an estimated long-run investment value for a share of stock. Analysis revealed that statistically significant differences in stock valuation esti-

In recent years, several studies have appeared which provide some support for an inverse relationship between earnings variability and share price.' That is, increased variability in reported earnings, other things equal, appears to reduce the price of a firm's shares. A rationale for this behavioral phenomenon has been suggested by several accounting writers. Almost two decades ago Hepworth contended that :2