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Uniform Versus Discretionary Regimes in Reporting Information with Unverifiable Precision and a Coordination Role

Publication ,  Journal Article
Chen, Q; Lewis, TR; Schipper, K; Zhang, Y
Published in: Journal of Accounting Research
March 1, 2017

We examine uniform and discretionary regimes for reporting information about firm performance from the perspective of a standard setter, in a setting where the precision of reported information is difficult to verify and the reported information can help coordinate decisions by users of the information. The standard setter's task is to choose a reporting regime to maximize the expected decision value of reported information for all users at all firms. The uniform regime requires all firms to report using the same set of reporting methods regardless of the precision of their information, and the discretionary regime allows firms to freely condition their sets of reporting methods on the precision of their information. We show that when unverifiable information precision varies across firms and users' decisions based on reported information have strong strategic complementarities, a uniform regime can have a beneficial social effect as compared to a discretionary reporting regime. Our analysis generates both normative and positive implications for evaluating the necessity and effectiveness of reporting under standards.

Duke Scholars

Published In

Journal of Accounting Research

DOI

EISSN

1475-679X

ISSN

0021-8456

Publication Date

March 1, 2017

Volume

55

Issue

1

Start / End Page

153 / 196

Related Subject Headings

  • Accounting
  • 3502 Banking, finance and investment
  • 3501 Accounting, auditing and accountability
  • 1502 Banking, Finance and Investment
  • 1501 Accounting, Auditing and Accountability
 

Citation

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Chen, Q., Lewis, T. R., Schipper, K., & Zhang, Y. (2017). Uniform Versus Discretionary Regimes in Reporting Information with Unverifiable Precision and a Coordination Role. Journal of Accounting Research, 55(1), 153–196. https://doi.org/10.1111/1475-679X.12130
Chen, Q., T. R. Lewis, K. Schipper, and Y. Zhang. “Uniform Versus Discretionary Regimes in Reporting Information with Unverifiable Precision and a Coordination Role.” Journal of Accounting Research 55, no. 1 (March 1, 2017): 153–96. https://doi.org/10.1111/1475-679X.12130.
Chen Q, Lewis TR, Schipper K, Zhang Y. Uniform Versus Discretionary Regimes in Reporting Information with Unverifiable Precision and a Coordination Role. Journal of Accounting Research. 2017 Mar 1;55(1):153–96.
Chen, Q., et al. “Uniform Versus Discretionary Regimes in Reporting Information with Unverifiable Precision and a Coordination Role.” Journal of Accounting Research, vol. 55, no. 1, Mar. 2017, pp. 153–96. Scopus, doi:10.1111/1475-679X.12130.
Chen Q, Lewis TR, Schipper K, Zhang Y. Uniform Versus Discretionary Regimes in Reporting Information with Unverifiable Precision and a Coordination Role. Journal of Accounting Research. 2017 Mar 1;55(1):153–196.
Journal cover image

Published In

Journal of Accounting Research

DOI

EISSN

1475-679X

ISSN

0021-8456

Publication Date

March 1, 2017

Volume

55

Issue

1

Start / End Page

153 / 196

Related Subject Headings

  • Accounting
  • 3502 Banking, finance and investment
  • 3501 Accounting, auditing and accountability
  • 1502 Banking, Finance and Investment
  • 1501 Accounting, Auditing and Accountability