Stability of Monetary Unit and Informativeness of Corporate Financial Reporting

Shyam Sunder

Yale School of Management Working Papers from Yale School of Management

Abstract: Monetary unit is a basic element of accounting used to manage, report, govern and tax organizations in all sectors of the economy. Instability of monetary unit introduces noise, weakening the effectiveness of accounting in performing its important economic roles in society. We model the impact of monetary instability on the accuracy of accounting valuation and consequently on the economics of managing organizations. We also examine some empirically testable implications of the theory. Though the magnitude of this effect remains to be estimated, it may be significant enough to deserve explicit consideration in selection of monetary policy.

Keywords: Stability of Monetary Unit; Corporate Financial Reports; Information (search for similar items in EconPapers)
Date: 2002-05-01, Revised 2002-07-01
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Working Paper: Stability of Monetary Unit and Informativeness of Corporate Financial Reporting (2002)
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