Do the Benefits of Reducing Accounting Complexity Persist in Markets Prone to Bubble?

• 成果类型: Article
• 署名作者: Hobson, Jessen L.
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/j.1911-3846.2011.01089.x
• 发表日期: 2011
• 页码: 957-+
• 关键词: psychological-research; asset markets; INFORMATION; Mediation; EFFICIENCY; confidence; judgments; investors; DECISION; expectations

摘要

Standard setters and regulators generally assume that making accounting information easier to process leads to more efficient markets, thereby benefiting traders. I test that assumption in markets that I construct to be more prone to price bubbles. Market efficiency (i.e., trading at expected fundamental economic values) will increase if and only if reduced accounting information complexity leads traders to process that information to a greater extent than more complex information and then to trade in a manner that moves price closer to fundamental value. I test these relationships in an experiment in which traders buy and sell shares of an asset in a multiperiod, double auction market in which speculative capital gains are possible. I find that reducing complexity in information increases information processing ease. This increased information processing increases market efficiency in markets less prone to price bubbles but not in markets more prone to price bubbles. This is because in markets more prone to price bubbles some traders that process information trade in a rational manner that moves price away from expected fundamental value, thereby harming other traders. Thus, the benefits of reducing accounting complexity do not persist in markets prone to bubble.