Analyze each of the following concepts and illustrate how they affect corporate financial reporting.
? Efficient Market Hypothesis
? Economic Consequences of Accounting Standards
? Relevance and Reliability of Accounting Information (SFAC No. 2)
? Recognition and Measurement in Accounting (SFAC No. 5)
First, the efficient market hypothesis claims that financial markets are efficient as regards the integration of all known information into an asset price. Hence, this means that at any given time the fair market value of a company's stocks reflect all information disclosed by the organization. Thus, the company can efficiently integrate the impact of any non-public, material information into its stock price, and therefore to ...
The expert examines efficient market, relevance and measurement of accounting information.