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Financial information, effects of financial information on economic decision

Author

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  • TAK ISA

    (The Bucharest Academy Of Economic Studies)

Abstract

Financial information has, indisputably, an important effect in economics. To form an effective capital market, financial information must be reliable and accurate. Misleading financial information always has a negative impact on economic decision taken by users. It is known that financial information as the cornerstone of financial markets, can improve economic performance in several ways. Nowadays we are facing economic crisis due to irregularities of presentation of financial statements to users. Misunderstandings cause economic recession. Detection of fraudulent financial information, is an important issue facing the auditing profession. Currently, bankruptcy of companies around the world, leaves millions of people without jobs, this is caused by financial information which is manipulated by companies. The purpose of this paper is to analyze the effects of errors and manipulation committed in the financial information sector on the real economy. Also one of the purposes of this paper is to analyze error and fraud in financial statements how it effects the real economy and the reasons for committing fraud in financial statements. Also, several suggestions are included in this study about actions that can be taken to prevent errors and manipulation in financial information.

Suggested Citation

  • Tak Isa, 2010. "Financial information, effects of financial information on economic decision," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 4, pages 217-231, December.
    • Handle: RePEc:cbu:jrnlec:y:2010:v:4.ii:p:217-231
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    References listed on IDEAS

    as
    1. Bushman, Robert M. & Smith, Abbie J., 2001. "Financial accounting information and corporate governance," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 237-333, December.
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