Accession Number : AD0669873

Title :   AN INDUCED THEORY OF ACCOUNTING UNDER RISK,

Corporate Author : CALIFORNIA UNIV LOS ANGELES WESTERN MANAGEMENT SCIENCE INST

Personal Author(s) : Hakansson,Nils H.

Report Date : JAN 1968

Pagination or Media Count : 48

Abstract : In two previous papers, a family of normative models of the individual's economic decision problem under risk were presented. In a separate article, it was demonstrated that these models also give rise to an induced theory of the formation and operation of firms under risk for the aforementioned class of utility functions. In the present paper, it is shown that the same models, developed with the individual in mind, have as further off-spring an induced theory of accounting for all firms so formed. The concepts of decision-relevant information and reporting-relevant information are defined by reference to the optimal decision rules and the 'separateness' of economic entities. The properties of the accounting model developed in the paper are examined in some detail and are compared to those of the conventional accounting model; this comparison pinpoints some significant differences, particularly with respect to the contents of the financial reports, as well as a number of important similarities, notably with respect to basic premises. (Author)

Descriptors :   (*DECISION THEORY, ECONOMICS), (*ECONOMICS, MANAGEMENT PLANNING AND CONTROL), (*MANAGEMENT PLANNING AND CONTROL, MONEY), OPTIMIZATION, DYNAMIC PROGRAMMING, MATHEMATICAL MODELS, PROBABILITY

Subject Categories : Administration and Management
      Economics and Cost Analysis
      Operations Research

Distribution Statement : APPROVED FOR PUBLIC RELEASE