Journal of Accounting Research Vol. 11 No. 2 1973
The Effects of Alternative Inventory Valuation Methods-An Experimental Study
Abstract
In this paper we report some additional evidence regarding the effects of alternative inventory accounting techniques on the decisions of laboratory subjects. Briefly, we have attempted to incorporate various factors within the experimental design which may aid us in interpreting the findings from such laboratory experiments on the effects of alternative accounting techniques. At the outset, we wish to clarify our views about the entire issue of how accounting procedures may affect resource allocation decisions. First, there is an impressive body of evidence supporting the efficient market hypothesis in the assessment of the impact of new information on the prices of securities in capital markets.1 At the aggregate level, there is little reason to believe that the market is fooled by different accounting methods.2 However, the available evidence on the efficient market implies nothing about the ability of individual decision-makers, such as managers and credit officers, to adjust accounting reports across different valuation techniques. Individual decision-makers are our only concern. Granting this orientation, there is still some doubt about the implications of the findings of experimental studies like ours concerning the whole issue of alternative accounting techniques. As an example, suppose subjects-especially students-favor as an investment a firm which reports
- DOI
- 10.2307/2490189
- Volume
- 11
- Issue
- 2
- Pages
- 191
- Sources
- bibtex:phds-export.bib openalex crossref