The Theory and Measurement of Business Income

By E. O. Edwards, P. Bell. 2023

860 citations recorded by the source corpus.

"This is a well-written book; the complex ideas are clearly expressed and the arguments well stated. There is some apparent rediscovery (and renaming) of old ideas, but the process is made palatable and worthwhile by the crispness of the discussion and the unwavering penetration to the root of each issue as it arises. Most difficult problems in the social sciences, the authors note, have no definitive solutions, but simply outcomes. This book deserves a niche among the classic works in the business income literature as a significant milestone on the road to whatever outcome the future holds." (The Journal of Business). "Professors Edwards and Bell give us a most satisfying study of different concepts of business income. It is rare to find authors so much at home in both economics and accounting. As they themselves suggest, time may show that their programme needs amendment; but they state the problem clearly and provide an excellent starting point. In passing, they give help on many other questions - when to replace plant, how to measure depreciation, which rate of compound interest to use in budgets, and so on. Beyond doubt their book is the most wise and original contribution to accounting theory since Professor Bonbright wrote 'The Valuation of Property' a quarter of a century ago." (The Economist).

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/5e38e9f553d7f44975f9eaeed09951e06f3ef6cc

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Citations in the corpus

Fair Value and the IASB/FASB Conceptual Framework Project: An Alternative View (2008, methodology): “Theoretical support for the Alternative View can also be found in the classic work of Edwards and Bell (1961), who were also economists by training.”
Ratio Analysis and Equity Valuation: From Research to Practice (2001, methodology): “This model is well established in the academic literature (in Preinreich (1938), Kay (1976), Edwards and Bell (1961) and Ohlson (1995), for example).”
Firm Litigation Risk and the Insurance Value of Corporate Social Performance (2013, background): “Keywords: corporate social performance, insurance value, risk management, firm valuation models, legitimacy”
The impact of voluntary corporate disclosures on the ex-ante cost of capital for Swiss firms (2002, neutral): “Earlier analytical treatment can be found in Preinreich (1938), Lücke (1955), Edwards and Bell (1961) and Peasnell (1982).”
Equity Undervaluation and Decisions Related to Repurchase Tender Offers: An Empirical Investigation (2000, background): “4Earlier attempts at developing RIM are Preinreich (1938), and Edwards and Bell (1961).”
Evaluating cross-sectional forecasting models for implied cost of capital (2014, methodology): “The residual income valuation model was developed in early work by Preinreich (1936), Edwards and Bell (1961), and Peasnell (1982) and formalized more recently in a series of papers by Ohlson (1995) and Feltham and Ohlson (1995, 1996).”
Economic Consequences of Key Performance Indicators' Disclosure Quality (2015, positive): “Edwards-Bell-Ohlson accounting model (Edwards and Bell, 1961; Ohlson, 1995).”
Capital Markets Research in Accounting (2001, background): “The Liu and Thomas (1999a, b) type of research begins with the Edwards and Bell (1961), Peasnell (1982), Ohlson (1995), and Feltham and Ohlson (1995) residual income valuation model.”
Moving the financial accounting research front forward: the UK contribution (2005, background): “15 Note that the concept of residual income can be traced back to Peasnell (1982), Edwards & Bell (1961) and earlier.”
To tell the truth: A discussion of issues concerning truth and ethics in accounting (2011, background): “Income theorists Edwards and Bell (1961), Sterling (1970), and Chambers (1966) argued for the inherent objectivity of business income measurement, emphasizing the centrality of factuality with respect to value rather than the factuality of actions.”