The Relevance of SFAS 33 Inflation Accounting Disclosures in the Adjustment of Stock Prices to Inflation.

Bill McDonald; Michael H. Morris

doi:10.2308/tar-4490870

The Relevance of SFAS 33 Inflation Accounting Disclosures in the Adjustment of Stock Prices to Inflation.

Bill McDonald¹; Michael H. Morris²

¹ Assistant Professor of Finance, University of Notre Dame. 1 · ² Assistant Professor of Accountancy, University of Notre Dame. 2

The Accounting Review 1984

Abstract ABSTRACT: This study tests the reaction of security returns to anticipated and unanticipated inflation using SFAS 33 data to stratify firms cross-sectionally by inflation sensitivity. The cross-sectional stratification allows for the distributive effects of inflation and provides a unique means of assaying the accounting disclosures. The results confirm the significant negative impact of unanticipated inflation on security returns for the 1980-82 period. The market measure of inflation sensitivity, however, does not appear to be related in any way to accounting measures of inflation sensitivity based on SFAS 33 data.

DOI: 10.2308/tar-4490870
Volume: 59 (3)
Pages: 432-446
Language: en
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