Economic Policy Review
Transparency, Financial Accounting Information, and Corporate Governance
April 2003 Volume 9, Number 1
JEL classification: D8, G3, M4

Authors: Robert M. Bushman and Abbie J.Smith

Audited financial statements along with supporting disclosures form the foundation of the firm-specific information set available to investors and regulators. In this paper, the authors discuss economics-based research focused on the properties of accounting systems and the surrounding institutional environment important to effective governance of firms. They provide a framework for understanding the operation of accounting information in an economy, discuss a broad range of important research findings, present a conceptual framework for characterizing and measuring corporate transparency at the country level, and isolate a number of future research possibilities.

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