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formation Systems Research Program Conference, May 7, 1976. Los Angeles: Graduate School of Management, Uni-versity of California, Los Angeles, 1976. Ijiri, Y. Theory of Accounting Measurement. Studies in Accounting Research. Sarasota, FL: American Accounting As-sociation, 1975. Schrader, W.L. "An Inductive Approach to Accounting Theory," Accounting Re-view, October 1962, pp. 645-649.
See also A Statement of Basic Accounting Theory; ACCOUNTING PRINCIPLES BOARD; AMERICAN ACCOUNTING ASSOCIATION; AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS; An Introduction to Corporate Accounting Standards; CHAMBERS, RAYMOND JOHN; CONCEPTUAL FRAMEWORK; FINANCIAL ACCOUNTING STANDARDS BOARD; HISTORICAL COST; LITTLETON, A.C.; MATCH-ING; NORMATIVE ACCOUNTING; PATON, WILL-IAM ANDREW; SCHRADER, WILLIAM JOSEPH; SECURITIES AND EXCHANGE COMMISSION; STEWARDSHIP
Demski, Joel S. (1940- )
Prolific, creative accounting scholar and key proponent of the "economics of information" perspective on accounting, Joel S. Demski pio-neered the use of formal deductive techniques in accounting theory. Hallmarks of his work are precisely specified models, formal definitions, and rigorous, mathematical proofs. Demski uses these methods to study a variety of topics, including information processing in financial markets, the value of information in competi-tive contexts, hierarchical incentive structures, the theory of cost measurement, the concept of income, and the process of setting accounting standards. His 1980 book, Information Analy-sis, provides an elementary introduction to his approach and methods.
Demski views accounting systems as so-cial constructions, and he adopts the position of social scientist, rather than inventor or ad-vocate. As an accounting scholar, he seeks to explain the choices made among alternative accounting methods and systems using the mathematical economists' description of hu-man behavior as expected utility maximiza-tion. Because he sees the essence of account-ing as information production, Demski considers choices among accounting systems
as essentially choices among the information structures induced by them. In turn, informa-tion is viewed as valuable only to the extent that it improves decisions. Thus, another hall-mark of Demski's work is the study of ac-counting choices as integral parts of some broader decision context. The representation of preferences by expected utility maximiza-tion is used to study both the accounting choices and the underlying choices, the im-provement of which is the target of the ac-counting decisions.
An example is Demski's analysis of ac-counting standards. Accounting policymakers had sought to capture good accounting choices in a list of attributes such as relevance, timeli-ness, objectivity, and the like. Building on the work of the American statistican David Blackwell, who was interested in game theory and decision analysis, Demski noted that the only such criterion guaranteed to reflect the preferences of users of information is a measure of the amount of information, called fineness, contained in an accounting system. Fineness, however, is an incomplete relation. Some infor-mation systems convey different things, rather than more or less information about the same things. Therefore, no list of attributes specified independently of users' decision problems could capture their preferences over accounting sys-tems. Further, given any two accounting sys-tems not ordered by fineness, there exist users' decision problems in which each of the two systems is the preferred one.
Demski also applies these techniques to provide a framework for studying the perfor-mance-evaluation and control aspects of ac-counting. The efforts of William Joseph Vatter from the University of Chicago, Charles T. Horngren from Stanford University, and others provide a foundation for studying accounting in models of planning decisions like capital bud-geting and cost-volume-profits contexts. Demski has been instrumental in extending models of accounting to include the control aspects budgeting, variance analysis, and divi-sional-performance measurement. In the mod-els of control problems, two or more decision makers, modeled as expected utility maximiz-es, interact. If information about the various decision makers' actions is incomplete and their preferences diverge, an incentive problem re-sults. This allows the study of accounting sys-tems and methods that help mitigate these in-centive problems.
196 DEFINITIONS OF ACCOUNTING
Object Description
| Title |
History of accounting: An international Encyclopedia |
| Author |
Chatfield, Michael Vangermeersch, Richard |
| Subject |
Accounting -- History |
| Date-Issued | 1996 |
| Source | Originally published by Garland Publishing, Inc. |
| Rights | Copyright and permission to reprint held by: Academy of Accounting Hitorians |
| Type | Text |
| Format | PDF scanned at 400dpi with corrected OCR |
| Digital Publisher | University of Mississippi Libraries. Accounting Collection |
| Date-Digitally Created | 2011 |
| Language | eng |
| Identifier | vangermeersch |
