"DO FINANCIAL STATEMENT USERS JUDGE RELEVANCE BASED ON PROPERTIES OF RELIABILITY?

KADOUS, KATHRYN, LISA KOONCE, AND JANE M. THAYER. 2012. THE ACCOUNTING REVIEW 87 (4): 1335-1356
ANDRI TARIPUDIN (F1312009)
ANDRYANSYAH (F1312010) ILHAM GANESA HAROSBIYANTO (F1312060)

Kerangka Teoritis

Relevance and reliability (now referred to as "representational faithfulness") are important qualities of financial reporting that both the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) use in setting standards (FASB 2010; IASB 2010) financial statement users assessments of the relevance of an economic construct will be influenced by factors (i.e., potential for bias and error) underlying the reliability of its measurement

Kerangka Teoritis

We examine this idea in the context of fair value measurement of an asset, as relevance and reliability issues are of particular practical concern there recent concerns about bias in the computation of fair value measurements undermining their decision usefulness are misplaced (Zion, et al. 2008, 2009) although a lack of either relevance or reliability precludes a measure from being decision useful, the qualities of relevance and reliability are independently determined.

Kerangka Teoritis

participants appear to conflate properties underlying reliability (e.g., representational faithfulness, measurement error) with the quality of relevance

Kerangka Teoritis

the economic importance of our ideas by determining whether users judgments about a firms valuation are influenced by the relationships noted above.

Hipotesis

H1: Financial statement users assessments of the relevance of fair value information will be influenced by factors underlying the reliability of its measurement (i.e., potential for bias and error). H2: Financial statement users valuation judgments will be influenced by factors underlying the reliability of a measurement via two effectsone through assessed reliability and a second through assessed relevance.