[Forside] [Hovedområder] [Perioder] [Udannelser] [Alle kurser på en side]
LEARNING OBJECTIVES:
After following this course, students should be able to
· Apply the fundamentals of the information content perspective on financial reporting
· Reflect on how financial reporting regulation influences private information
acquisition and use, and the informativeness of prices.
· Formulate and apply the connections between various equity valuation models
· Apply the decision-influencing role of financial reporting
· Reflect on how financial reporting regulation.
COURSE DESCRIPTION:
Financial reporting is a process in which the firm's management in a systematic way reports information about the underlying economic conditions of the firm to external parties, such as shareholders, creditors, customers, and employees. The reported information may be useful in a number of different contexts (i.e., there must be a reason to do the accounting). In this course we will focus on two such contexts: the valuation and stewardship roles of accounting. Financial reports use the language of valuation, for example, by reporting values of assets and liabilities in the balance
sheet, but the applicable rules for determining these accounting values are restricted by generally accepted accounting principles. In this case, the accounting principles can be viewed as an information system conveying information potentially useful for predicting the fundamental value of the firm - the valuation role. Private and public information interact in affecting the functioning of equity markets and thus in the valuation of firms. When investors have access to private information, information can be gleaned from stock prices and hence analysis of accounting regulation, must include potential effects on private information acquisition and the derived effects on what can inferred from prices.
Managers may not make the choices most preferred by the firm's owners. To
mitigate this problem, the firm's owners establish formal or informal incentive systems that are designed to motivate the manager to choose the actions which they prefer. Financial reports are often an important part of these incentive systems - the stewardship role. Incentive contracts' dependence of reported accounting numbers potentially creates incentives for management to misrepresent the firm's economic conditions. Recognizing these incentives provides a framework for understanding the role of accounting regulation, and the fact that financial reports are audited.
COURSE SUBJECT AREAS:
1. Accounting Foundations and Modeling Information
2. Information Content and Valuation
3. Accounting Information and Rational Expectations
4. Financial Statements and Valuation
5. Accounting Analysis and Valuation
6. Information Content and Managerial Contracting
7. Comparative Advantage of Accounting as a Source of Information
8. End Game.
REQUIRED COURSES:
2 semester BSc/BA Accounting
LECTURER:
Hans Frimor and Peter Ove Christensen.
TEACHING METHOD:
Lectures and discussion of cases.
LITERATURE:
Christensen, J. A., and J. S. Demski: Accounting Theory - An Information Content
Perspective, McGraw-Hill, 2003.
Christensen, P. O., and G. A. Feltham: Economics of Accounting: Volume I -
Information in Markets, Springer Science+Media, 2003, Chapters 7 and 11.
Christensen, P. O. and H. Frimor: Lecturenotes and Cases, University of Aarhus,
2009.
Penman, S. H.: Financial Statement Analysis and Security Valuation, McGraw-Hill,
2003, Chapters 1-9, and 13.
(approx. 800 pages).
FORM OF ASSESSMENT:
Oral examination of 20 minutes' duration with 20
minutes' preparation time.
EXAMINATION AIDS ALLOWED:
All - except any means of electronic communication including PCs.
