COMM 318 Chapter Notes - Chapter 12: Public Good, Indirect Costs, Freeriding

• School: Queen's University
• Department: Commerce
• Course: COMM 318
• Professor: Ahmed E Hassan

Document Summary

We view standard setters as mediators between conflicting interests of investors and managers. First-best amount of information production: amount of information that equates the marginal social benefits of information to the marginal social costs. Public-good nature of accounting information regulator tries to increase information production to compensate for the underproduction that arises for public goods (externality) Protect individuals who are at an info disadvantage due to info asymmetry. Increasing the public"s opinion of companies by increasing transparency in their function (smoother operation of capital and managerial labour markets) Standard setting: the regulation of firms" information production decisions by a regulator. Proprietary information: info that, if released, would directly affect future cash flows of the firm. Non-proprietary information: info that, if released, does not directly affect firm cash flows. Finer information: adds additional details to existing information, like additional info to the financial statements. Additional information: introduction of new information systems to report on matters not currently included.