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Relevance refers to the capacity of information to influence the decision making process of users. The Solomons Report (1989) has emphasized on this point: 'Relevance must come first, for if information is irrelevant, it does not matter what other qualities it has'.

FASB Concepts Statement 2,says in paragraph 27, to be relevant accounting information must be able to make a difference in a decision by facilitating users to form predictions about the result of past, present and future events. It also proposed that there is a trade-off between relevance and reliability that is accounting information should be both relevant and reliable.

A number of research by Stanga (1980), and Mores and Duncan (1988) have already been conducted to deal with the issue of relevance and reliability and that optimistic association exists between the two, with minimum levels of reliability necessary to achieve relevance.

2.4.1.2 可理解性——2.4.1.2 UNDERSTANDABILITY

Understandability is viewed as a user-specific property in the FASB model. Information cannot be useful to decision makers who cannot understand it, even though it may otherwise be relevant to a decision and be reliable. Information is understandable when users will be able to reasonably grasp its meaning. Thus useful information should be capable of being understood by users with reasonable knowledge of business and accounting and the way information is presented in annual reports.

In addition, researchers like Subramanian, Insley, and Blackwell (1993), had evaluated the relationship between the performance of companies and the readability of their annual reports, concluding that the annual reports of companies that done well were easier to read than those of companies that did not perform well.

2.4.1.3 可靠性——2.4.1.3 RELIABILITY

Reliability involves the completeness of information. Information is reliable when it is free from material error and bias and can be depended upon by users to signify faithfully.

FASB has also concluded that verifiability is a major factor of reliability. Verifiability is the ability through consensus among measurers to guarantee that information represents what it purports to represent. It also focuses on whether a particular basis of measurement is properly pertained, rather than on whether it is appropriate.

While Lev and Thiagarajan (1991), got proof that the market does not retort to certain balance sheet information results of other studies suggested that it may wait until the balance sheet information shows up in future earnings which make accounting information more verifiable and reliable.

2.4.1.4 完整性——2.4.1.4 COMPLETENESS

The corporate Report (1975) proposes that completeness is another quality for information to be useful, in other words reported information should provide a complete image of the activities of the organization. Goo本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。