British wit Samuel Johnson one time...

British wit Samuel Johnson one time was asked whether there were any benefits of being sentenc to hang. Perhaps the same he replied: "It wonderfully focuses the mind." Financial reporting has a great deal of the same effect--by focusing attention onward the next year-end report, it guards to distract attention from virtually everything besides including a key determinant of shareholder value.

Shareholder value ultimately has couple components: a firm's current without deductions worth and its expected what may occur hereafter profits. Investors may well adjust the first constituent to eliminate peculiarities of accounting conventions. For example, an insurer's statutory or GAAP surplus (net worth) may ne to