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Knowing What Others Know: Common Knowledge, Accounting, and Capital Markets

Author

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  • Shyam NMI Sunder

    (School of Management)

Abstract

The concept of common knowledge concerning higher orders of knowledge has seen exciting new developments in the fields of philosophy, game theory, statistics, economics and cognitive science in the recent decades. Even though information lies at the heart of accounting and capital markets research, these new developments have had only a faint echo in these fields. Common knowledge thinking may significantly advance our understanding of financial reporting, analysis, securities valuation, managerial control, auditing and information systems. Such accounting and business applications will also make important contributions in the form of concrete real life examples and applications to the basic fields where the idea of common knowledge originated. This paper is an overview of common knowledge and its actual and potential applications to accounting and capital markets research.

Suggested Citation

  • Shyam NMI Sunder, 2001. "Knowing What Others Know: Common Knowledge, Accounting, and Capital Markets," Yale School of Management Working Papers ysm213, Yale School of Management.
    • Handle: RePEc:ysm:somwrk:ysm213
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    Cited by:

    1. Timo Ehrig & Jaison Manjaly & Aditya Singh & Shyam Sunder, 2022. "Adaptive Rationality in Strategic Interaction: Do Emotions Regulate Thinking About Others?," Strategy Science, INFORMS, vol. 7(4), pages 330-349, December.
    2. David Procházka & Jiří Pelák, 2016. "Ekonomické teorie účetnictví: přehled moderních přístupů a jejich reflexe při tvorbě účetních standardů [Economic Theories of Accounting: The Review of Modern Approaches and their Relevance for Standard-Setting]," Politická ekonomie, Prague University of Economics and Business, vol. 2016(4), pages 451-467.
    3. Andreas Haake, 2012. "Die Grundregeln von Herbert Hax zur Performance-Messung und die Bilanzierung von Kreditrisiken," Schmalenbach Journal of Business Research, Springer, vol. 64(1), pages 71-110, February.
    4. Larry Bensimhon & Yuri Biondi, 2013. "Financial Bubbles, Common Knowledge and Alternative Accounting Regimes: An Experimental Analysis of Artificial Spot Security Markets," The Japanese Accounting Review, Research Institute for Economics & Business Administration, Kobe University, vol. 3, pages 21-59, December.
    5. Dassiou, X. & Glycopantis, D., 2019. "The importance of reputation in the auditing of companies: A game theory analysis," Working Papers 19/01, Department of Economics, City University London.
    6. Biondi Yuri, 2011. "The Pure Logic of Accounting: A Critique of the Fair Value Revolution," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 1(1), pages 1-49, January.
    7. Robert J. Bloomfield & Mark W. Nelson & Steven D. Smith, 2006. "Feedback loops, fair value accounting and correlated investments," Review of Accounting Studies, Springer, vol. 11(2), pages 377-416, September.
    8. Chia-Feng (Jeffrey) Yu, 2017. "Interactive Reporting Bias Surrounding CEO Turnover," European Accounting Review, Taylor & Francis Journals, vol. 26(2), pages 239-282, April.
    9. Yuri Biondi & Pierpaolo Giannoccolo, 2015. "Share price formation, market exuberance and financial stability under alternative accounting regimes," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 10(2), pages 333-362, October.
    10. Florence Cavelius, 2011. "Opening the "black box" How internal reporting systems contribute to the quality of financial disclosure," Post-Print hal-00869182, HAL.
    11. Jana Skálová & Ladislav Mejzlík & Marcel Bareš, 2020. "Vykazování jiného výsledku hospodaření minulých let v českých společnostech [Reporting of Prior Period Errors and Changes in Accounting Policies by Czech Companies]," Politická ekonomie, Prague University of Economics and Business, vol. 2020(3), pages 245-266.
    12. Ackert, Lucy F. & Church, Bryan K. & Zhang, Ping, 2008. "What affects the market's ability to adjust for optimistic forecast bias? Evidence from experimental asset markets," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 358-372, May.
    13. Y. Biondi & P. Giannoccolo & A. Reberioux, 2010. "Financial disclosure and the Board: A case for non-independent directors," Working Papers 689, Dipartimento Scienze Economiche, Universita' di Bologna.
    14. Hun†Tong Tan & Karim Jamal, 2006. "Managing Perceptions of Technical Competence: How Well Do Auditors Know How Others View Them?," Contemporary Accounting Research, John Wiley & Sons, vol. 23(3), pages 761-787, September.

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    Keywords

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    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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