A Portfolio Analysis of General Price Level Restatement.

Abstract This article presents an extension of a research project being conducted by the author to study the impact of general price level restatements on published financial information. The parameters selected for analysis were: return on owner's equity, net income, and standard deviation of net income. The paper reported the impact on sequential ordering of the companies under examination as a result of general price level restatement of the underlying data. In the concluding comments of the paper it was stated that: "The financial parameters selected for analysis have not been proved relevant to decision models. The impact of changes in a measurement rule on financial data has been the basis of this analysis. It has been assumed that small relative changes could have relatively small effect on decisions in the absence of specification of an appropriate decision model." The article provides an analysis of the data using portfolio techniques and certain other theories drawn from the field of finance.