Biases in Accounting and Nonaccounting Information: Substitutes or Complements?
Journal of Accounting Research · 2016 · Volume 54 · Issue 5
Abstract
This paper studies how bias in nonaccounting and in accounting information should be related. Bias in accounting information is modeled, as in some recent literature, as an alteration in the relative information content of accounting numbers. The optimal bias in one type of information is shown to be a complement of the bias in the other type. This result can be applied in various settings to explain a number of phenomena.
Keywords
C72, D81, D86, M40, M41, accounting bias, information system, complementary information
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