Universität zu Köln

Kuhner, Christoph and Pelger, Christoph (2015). On the Relationship of Stewardship and ValuationAn Analytical Viewpoint. Abacus, 51 (3). S. 379 - 412. HOBOKEN: WILEY. ISSN 1467-6281

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Abstract

Agency theoretical literature in accounting has frequently stressed possible difficulties in pursuing stewardship and valuation usefulness simultaneously. However, recent empirical evidence has revealed a significantly positive correlation between the two objectives. These empirical findings provide support for the IASB/FASB's decision to encompass stewardship in valuation usefulness in their revised conceptual framework. The objective of our paper is to identify factors influencing the stewardship/valuation relationship by using an analytical model. In a Linear Exponential Normal (LEN) setting we focus on the characteristics of an accounting system, in particular relevance, freedom from error and freedom from bias, the latter two according to IASB/FASB being components of representational faithfulness. We show that accounting quality, comprising relevance and freedom from error, has similar effects on valuation and stewardship usefulness. However, we identify conditions under which there is no perfect mapping from stewardship to valuation. Moreover, discretion in the accounting system has different consequences for both objectives as it does not affect valuation usefulness while it entails potentially negative effects on stewardship. Thus, we raise doubts in relation to the standard-setters' view that stewardship is automatically met by a focus on valuation usefulness.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Kuhner, Christoph UNSPECIFIED UNSPECIFIED UNSPECIFIED Pelger, Christoph UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-394486
DOI:	10.1111/abac.12053
Journal or Publication Title:	Abacus
Volume:	51
Number:	3
Page Range:	S. 379 - 412
Date:	2015
Publisher:	WILEY
Place of Publication:	HOBOKEN
ISSN:	1467-6281
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language IASB/FASB CONCEPTUAL-FRAMEWORK; VALUE-RELEVANCE LITERATURE; FAIR VALUE; ACCOUNTING STANDARDS; DECISION USEFULNESS; PERFORMANCE; EARNINGS; INFORMATION; QUALITY; PRICE Multiple languages Business, Finance Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/39448