Informational Foundations for the Macroeconomic Role of Aggregated Accounting Disclosures

I show that accounting reports contain macroeconomic signals that, when aggregated, inform agents about the economic state. These signals influence agents' economic decisions and therefore impact future economic growth. These effects are rooted in accounting's unique role in aggregating and transmitting the information content of individual transactions. As more transactions are aggregated, the strength and precision of the macroeconomic signal in accounting reports increases. Consequently, the macroeconomic information in accounting reports is greater during good states of the economy, when transaction volume is high, than bad states, when the volume is low. My tests indicate that aggregate accounting information contains roughly double the macroeconomic information content in good states relative to bad. Further, the macro content of earnings grows throughout good economic states as agents become more confident and the information environment improves, consistent with the information dynamics predicted by macroeconomic theory. My results open a number of avenues for future research, including how attributes of accounting information can aid or hinder the transfer of macroeconomic signals.

Name thesis:degree_name

Doctor of Philosophy

Level thesis:degree_level

Doctoral

Discipline thesis:degree_discipline

Business

Grantor

Rice University

Year dc:date.issued

2019

Author dc:creator

• Lind, Gary D

Advisor dc:contributor.advisor

• Ramesh, K.

• Business Cycle
• Disclosure
• Externalities
• Forecasting
• Learning
• Uncertainty

Statement dc:rights

• Copyright is held by the author, unless otherwise indicated. Permission to reuse, publish, or reproduce the work beyond the bounds of fair use or other exemptions to copyright law must be obtained from the copyright holder.

Language dc:language.iso

eng

Handle dc:identifier.uri

https://hdl.handle.net/1911/105961

OAI identifier oai:identifier

oai:repository.rice.edu:1911/105961