Information Interactions and Accounting Information User Reactions.

Abstract This article investigates the significance of accounting numbers through observation of the reactions of accounting information users to such numbers. In recent years, several researchers have attempted to measure the significance or usefulness of accounting numbers by observing the reactions of users of accounting information to such numbers. A significant allocation problem in the efficient markets model concerns the question of interactions. This issue is crucial anytime the magnitude of a whole differs from the magnitude of the sum of the components of the whole. A fundamental arbitrary allocation relating to interactions results from the assumption, which is implicit in efficient markets research and association tests, that only data that induce changes in behavior among market participants have information content. An array of balanced portfolios exists. Measurable changes in these portfolios will occur only when some information bit which alters investor expectations about some component of these portfolios is received.