Stephen Penman

Accounting for Value

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Accounting and valuation are so intertwined that valuation is really a matter of accounting; valuation involves accounting for value. Accordingly, a valuation is only as good as the accounting underlying it. How can one ask the question of what the price-earnings should be if the earnings are fuzzy? What is the meaning of price-to-book if book values are suspect? There is a question for both the investor and the accountant to answer: What is good accounting for valuation? Do International Financial Reporting Standards (IFRS) or U.S. GAAP fit the bill, or does the investor look for an alternative accounting for valuation?

Source: The European Financial Review
Exact Citation:
Penman, Stephen. "Accounting for Value." The European Financial Review October/November (2011): 62-65.
Volume: October/November
Pages: 62-65
Date: 2011