An approach for measuring the degree of comparability of financial accounting information

Abstract

This contribution sets out to provide an index to measure comparability of financial accounting information concerning specific kinds of transactions or events. It suggests definitions for the terms of comparability of financial accounting information and of accounting method. Requirements are derived from these definitions which must be met by an index of comparability, and entropy is shown to be an appropriate measure fulfilling these requirements. The problem of multiple reporting is dealt with separately. Finally, the measurement concept developed is applied to an example from the FEE report for 1989.