Reliability and Objectivity of Accounting Measurements.
Abstract The reliability of accounting measurements was defined as the degree of objectivity plus a bias factor. This relationship shows that the degree of objectivity can be measured without regard for the use of the measure but reliability cannot because the bias depends on the alleged value which in turn is related to the particular use of the measure. This conceptual relationship, which depends on the variance of measurement observations from their mean and the distance of this mean from the alleged value, gives valuable insights into some of the possible steps which can be taken by the members of the accounting profession to improve the reliability of accounting measurements. First, accountants ought to cooperate to the fullest possible extent with the users of accounting data to search for and define those factors or quantities which will be useful in decision processes. These factors were designated as y's. Accountants must then undertake to develop measurements which will produce accounting measurements (x's) that will give good predictions of these decision variables (y's). Both of these research efforts should help to reduce the bias, B. Accountants should also at- tempt to educate the users of the accounting data as well as be educated in the manner described above. If users of accounting data can be more effectively educated, they might change their function for relating x and y and this change can also result in decreasing the bias and improving reliability. Hence, reliability is definitely a two-way street. It may be that the reliability of a measurement can be improved by changing the measurement system; on the other hand, the reliability of the system may also be improved by changing the manner in which the output from the system is used. Another way to improve the degree of reliability may be to sacrifice objectivity, if the bias can be made much smaller as a result of sacrificing the objectivity.
- DOI
- 10.2308/tar-4515874
- Volume
- 41 (3)
- Pages
- 474-483
- Language
- en
- Export
- BibTeX
- Sources
- openalex crossref