Affiliations: [a] Department of Accounting, School of Business,
University of Southern Maine, P.O. Box 9300, Portland, Maine 04104, USA. Tel.:
+1 207 780 4303; Fax: +1 207 780 4662; email:
sjackson@usm.maine.edu
| [b] School of Accountancy, College of Business, Arizona
State University, Box 873606, Tempe, Arizona 85287-3606, USA. Tel.: +1 602 965
6293; Fax: +1 602 965 8392 | [c] School of Business & Public Administration,
University of the Pacific, Stockton, California 95211, USA. Tel.: +1 209 946
2630; Fax: +1 209 946 2586
Abstract: Recent studies by researchers, users, preparers, and regulators indicate a
renewed interest in the financial reporting of changing prices. The purpose of
this paper is to extend prior research in this area and to examine the relative
reliability of various changing prices income data. An econometric index of
measurement error is utilized to compare the relative reliability of historical
cost nominal dollar, historical cost constant dollar, and current cost nominal
dollar incomes from continuing operations during the 1979–1983 time period. The
results indicate that the current cost nominal dollar income measure was more
reliable than the historical cost nominal dollar income measure for several
years. These results are consistent with the variety of present proposals to
enhance the financial reporting of changing prices in the USA.
Keywords: Financial reporting of changing prices, measurement error, reliability, economic value
