Financial Accounting Theory


Course Objective

This course introduces students to the mainstream economics-based
approaches to financial accounting theory development and research,
including research concepts relating to measuring the impact and
relevance of financial accounting information (Academic and research
skills). The concepts are discussed in relation with the audit
profession and standard setting to understand and question the rationale
for accounting standards and practices (Bridging theory and practice -
knowledge; Broadening your horizon - responsibility).

After following this course students can:
1. explain the role of accounting (more specifically financial
reporting) in the economic environment, such as capital markets and
2. analyze the usefulness of accounting from the point of view of
different users;
3. analyze and see through the interests of different stakeholders
(users) of financial accounting information in order to properly judge
on their proposals and reasoning;
4. understand, interpret, and explain selected empirical research on the
preceding issues and propose logical hypotheses on these issues with
models to test these.

Course Content

This course introduces students to an important part of the research
literature, which takes its starting point in mainstream economics. The
basic assumption is that financial accounting can be understood as part
of the rational economic decision-making of firms and individuals.
Important topics are: how accounting information can be (and is) used as
source of information in decision making such as investment decisions;
how this information value can be investigated empirically; how the
efficiency of capital markets may influence the opinion on the role of
accounting; how accounting information is used in contracting and what
the consequences are when looking at the incentives of different
stakeholders, and what aspects are important when developing or judging
standard setting. The course has a strong focus on the economics of
accounting. The course is based on academic papers covering a wide
variety of topics in the area of economics of financial accounting.

Teaching Methods

Lectures; weblectures; tutorials with paper presentations, discussions,
and assignments

Method of Assessment

Written exam with open questions (80%); presentations of papers (20%)


A selection of academic papers

Target Audience

Students interested in the role and value of (financial) accounting
information in the economic environment.
Students specializing in financial accounting or auditing or those
trying to get a broader understanding of the economic rationale for
accounting and its applications by preparers and users of accounting

Recommended background knowledge

The course is intended for students who have obtained at least an
intermediate knowledge of current financial reporting regulation and are
able to read and understand (complex) academic papers based on the
mainstream empirical research methods in accounting. It is highly
recommended that students have knowledge of empirical research at the
level of Empirical Research in Accounting.

General Information

Course Code E_ACC_FAT
Credits 6 EC
Period P4
Course Level 400
Language of Tuition English
Faculty School of Business and Economics
Course Coordinator prof. dr. J.L. Wielhouwer
Examiner prof. dr. J.L. Wielhouwer
Teaching Staff prof. dr. J.L. Wielhouwer

Practical Information

You need to register for this course yourself

Last-minute registration is available for this course.

Teaching Methods Seminar, Lecture
Target audiences

This course is also available as: