Is Accounting an Information Science?

Fellingham John () and Lin Haijin
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Fellingham John: Ohio State University, Columbus, USA
Lin Haijin: University of Houston, Houston, USA

Accounting, Economics, and Law: A Convivium, 2020, vol. 10, issue 1, 17

Abstract: The central result is an equality connecting accounting numbers with information. ln1+incomeassets=rf+IX;Y\ln \left( 1+\frac{income}{assets}\right) =r_{f}+I\left( X;Y\right), rfr_{f} is the risk free rate, lnln is the natural logarithm, YY is the outcome of interest, XX is the information signal about YY, and I(X;Y)I(X;Y) is a Shannon information measure. The equality is derived using economic income accounting; it is shown to hold, under appropriate conditions, for declining balance and straight line depreciation methods. Some social welfare implications are explored.

Keywords: accounting; information; Shannon entropy; welfare (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1515/ael-2016-0026

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