Academic journal article Economics, Management and Financial Markets

Accounting Information and Its Users. a Study of the Supply and Demand of Accounting Information in Romania

Academic journal article Economics, Management and Financial Markets

Accounting Information and Its Users. a Study of the Supply and Demand of Accounting Information in Romania

Article excerpt

1. Introduction

The contemporary accounting phenomenon presents features focusing on the information needs whose satisfaction requires the production of relevant and objective information. The same way as manufacturers are becoming more and more attentive at consumers' needs, accounting, through accountants, should take into account the producing of such information that can answer the various users' demand. The competence of the professional accountants is based on the quality of the provided information and on the satisfaction of as many users as possible. The aim of this article is to study the supply and demand of accounting information. Thus, on the one hand, the supply is analyzed through identifying the users of accounting information, at the same time explaining its necessity for each identified user, and, on the other hand, the demand is analyzed through the qualitative characteristics of the accounting information provided.

To attain this objective the research methodology has focused on the theoretical research of the bibliographic sources, using deduction in drawing the conclusions at the end of the undertaken study.

2. The Supply of Accounting Information: Users, Hierarchy, Necessity

Necessity. The accounting information provided by financial accounting through its financial statements (balance sheet, profit and loss account, explanatory notes to the balance sheet) is designed for external users, defined by: investors, bank creditors, commercial partners, social partners (employees), public power (public administration), other external users (stock exchange analysts) and managers (Malciu, 1998).

The established relationships delineated and highlighted in accounting have an objective determination, and the fact that they occur when an economic entity meets with third parties are fully disclosed. Starting from this point, the accounting is standardized, that is, it is based on rules regarding the production, presentation and use of accounting information.

Investors. Investors, as suppliers of capital and related capital risks, consume information on the performance of the invested capital, in conjunction with the risk expected and the dividends to be distributed. They need information to decide if they should buy, keep or sell "capital."

In general, investors (stockholders) want to measure the profitability and risk of their investments, according to those making the decision whether to maintain, increase or diminish their contributions. Thus, investors are interested in the economic entity's ability to achieve future gains. The notion of ability to achieve future gains refers to the extent to which the economic entity will adopt a strategy whose goal is to increase its wealth, obtain new funds and it will be able to turn, subsequently, benefits into available funds. The investors usually reason depending on the cash flows, which have a tangible representation, and less in terms of net benefit, which depending on the accounting conventions, do not always reflect the real economic wealth of the economic entity (Diaconu, 2006). Their reasoning also takes into account the fact that, as a rule, the economic entities use some of the gains made for self-financing. Although stockholders seem to be the first victims of self-financing, in reality, through self-financing, the net assets and the theoretical value of the stock increase. As a result, an increase in the stock market rate may occur or free distribution of stocks. Under these conditions, the stockholders recover through equity what they have lost in the form of dividends. Moreover, while the distributed benefits are, in most countries, subject to numerous taxation rules in cascade, and thus make the amount actually available for stockholders to diminish, the value of the stock gains are less taxed. But stockholders seek information about the dividend, too, since the latter does not represent only a simple cash transfer. This one and its rate of growth on a long term basis carry out a rich flow of information about the prospects of the economic entity. …

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