Accounting Standards: True or False? by Rayman R. A.;

Author:Rayman, R. A.;
Language: eng
Format: epub
Publisher: Taylor & Francis Group

Figure 11.1 Ownership and control combined

Figure 11.2 The divorce of ownership from control

Once the personal link between the manager and the investor is severed, the domestic threshold ceases to be ‘a pretty good line of division’. Many business firms are corporate bodies with a large number of managers and a multitude of different individual shareholders with different consumption preferences and different economic opportunities. They rarely, if ever, meet. For theorists, Fisher’s preference for ‘measuring at the domestic threshold’ of investors may be conceptually sound; but, for managers, that is not just impractical, it is impossible. The information is simply not available; and, even if it were, there is no way of reconciling the different consumption choices of different investors.

The choice of an alternative ‘threshold of measurement’ is therefore crucial.

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