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Article
Experimental Market Behavior and Accounting Students’ Knowledge of Permanent Earnings
Faculty Publications
  • Lucy Ackert, Kennesaw State University
  • Bryan K. Church, Georgia Institute of Technology - Main Campus
  • Deborah Turner, Georgia Institute of Technology - Main Campus
Document Type
Article
Publication Date
2-1-2001
Abstract
We conduct eight experimental asset markets to investigate accounting students' abilities to apply knowledge of "permanent earnings" in a market setting. Across the eight markets, asset value is a function of permanent earnings. Initially, we conduct three markets with participants recruited from an introductory financial accounting course, all of whom successfully completed the course. We find that market prices fail to converge to asset value in two of three sessions, even though data suggest that the students have factual knowledge of permanent earnings. We conduct five additional markets using undergraduate and graduate (master's) students recruited from an intermediate financial accounting course. In all five markets, prices converge to asset value. Our results suggest that additional course work beyond introductory financial accounting may be necessary to enrich students' knowledge stores so that they can apply knowledge of permanent earnings in a meaningful economic setting. [ABSTRACT FROM AUTHOR] Copyright of Issues in Accounting Education is the property of American Accounting Association
Citation Information
Ackert, Lucy F., Bryan K. Church, and Deborah H. Turner. "Experimental Market Behavior and Accounting Students' Knowledge of Permanent Earnings." Issues in Accounting Education 16.1 (2001): 1-19.