Chapter 7The Meaning of It All

To Recap

We have presented in this, the first part of the book, comprehensive evidence that clearly portrays a continuous and steep deterioration in the usefulness of financial (accounting) information to investors.1 The evidence, based on large samples comprising of most US public companies, spans the past half century, and examines information usefulness from four different perspectives:

  • The role of key financial report indicators—sales, cost of sales, SG&A expenses, earnings, assets and liabilities—in investors' equity decisions.
  • The timeliness (decision relevance) of financial information released to investors.
  • A capital market-free test: the ability of reported earnings to predict future corporate performance.
  • The quality of the financial information ...

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