Informational Issues in the Financial Reporting Process
用一个简单的委托代理模型分析财务报告过程，发现管理层对业绩的陈述（如未经审计的盈利预测或中期报告）和外部审计等验证技术都是降低信息不对称的关键信息来源。
An important function of the financial reporting process is the reduction of informational asymmetry between managements and economic organizations' claimholders. This asymmetry generally exists because management's decisions and their organizations' outcomes (net cash flows) are not directly observable by the claimholders. The information generated by the financial reporting process reduces this asymmetry and is essential in (1) motivating management to make decisions consistent with claimholders' interests and (2) enforcing claimholders' rights to their respective shares of organizations' cash flows. This paper will characterize the financial reporting process within a simple principal-agent model. The first main result is that there are two important sources of information in the financial reporting process. One source is a representation by the agent (manager) of the firm's outcome. This representation may be interpreted as an unaudited earnings forecast or an interim report. The second source of information is a verification technology employed by the principal (owner). One obvious example of such a technology is an external audit. I demonstrate that a strict demand can exist on the part of the principal for both representations (communications) and verifications of outcome. Because existing general principal-agent models have focused on one-stage models (i.e., only the verification stage) this result enriches understanding of the financial reporting process.