The governance of intangibles: Rethinking financial reporting and the Board of directors
AbstractWhen capital markets are assumed to be (informationally) efficient and the firm a mere collection of marketable resources, corporate governance and accounting are expected to be primarily concerned with making corporate insiders sensitive to external pressure: financial reporting and the board should replicate the market in the context of the firm. In particular, no firm-specific information is required to perform an effective control: independence of board members is the best quality to assure the monitoring of corporate insiders. However, whenever intangibles become significant, firm-specific information becomes as important as market prices to gauge the past and future performance of the business firm. Specific knowledge of the firm is then required to both disclose high-quality information and monitor corporate executives. This argues for the role of improved historical-cost accounting systems coupled with non-independent, proficient board members.
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Bibliographic InfoPaper provided by University of Paris West - Nanterre la Défense, EconomiX in its series EconomiX Working Papers with number 2008-36.
Length: 28 pages
Date of creation: 2008
Date of revision:
Find related papers by JEL classification:
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
- M41 - Business Administration and Business Economics; Marketing; Accounting - - Accounting - - - Accounting
- D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
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