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Accounting Standards, Regulations and Herd Behavior

Anghel Flavia Gabriela, Alina Avrigeanu () and Bogdan Glavan

Ovidius University Annals, Economic Sciences Series, 2010, vol. X, issue 1, 1406-1411

Abstract: It is argued that the current accounting and risk assessment methods have played an important role in developing financial panic. Mark-tomarket models and fair value accounting seem to stand as the basis a market failure and should be replaced by more conservative accounting methods. In this paper we reject this idea, emphasizing the weaknesses of historical cost accounting and mark-to-model financial model. We put the debate in a larger perspective, pointing to the relation between accounting methods and entrepreneurial economic calculation. Also, we criticize the association between fair-value accounting and the current crisis, arguind that the latter is more likely the result of risk regulation that determined herd behavior.

Keywords: financial assets; business cycle; entrepreneurial economic calculation; herd behavior (search for similar items in EconPapers)
JEL-codes: M4 M41 (search for similar items in EconPapers)
Date: 2010
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Ovidius University Annals, Economic Sciences Series is currently edited by Spatariu Cerasela

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