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- Title
Prediction Achievement and Simulated Decision Makers as an Extension of the Predictive Ability Criterion: Some Comments.
- Authors
Jiambalvo, James
- Abstract
The article presents comments of the author on the article "Prediction Achievement and Simulated Decision Makers As an Extension of the Predictive Ability Criterion," by Robert Libby published in the July 1975 issue of the periodical "The Accounting Review." In criticizing scholars W.H. Beaver, J.W. Kennelly and W.M. Voss' formulation of the predictive ability criterion, Libby notes that they fail to consider the human aspect of the prediction process. Utilizing the framework of Brunswik's Lens Model. Libby compares the left hand side of the model to the predictive ability model of Beaver and others. The right-hand side of the Lens Model incorporates the missing element of traditional predictive ability studies, the user of accounting data. Libby suggests that the "relevant index of usefulness is the prediction achievement index, which measures prediction accuracy. However, use of this index to evaluate alternative accounting information sets is limited by experimental considerations. Therefore, Libby turns to the estimated prediction achievement index as a measure of information relevance. Predictive ability studies conducted in the tradition of Beaver and others proceed along the following lines, select an event of interest, select a forecasting model and make predictions based upon accounting numbers calculated under alternative measurement.
- Subjects
ACCOUNTING; DECISION making; FORECASTING; EVALUATION; MATHEMATICAL models; LIBBY, Robert; GOAL (Psychology); BUSINESS education
- Publication
Accounting Review, 1976, Vol 51, Issue 3, p667
- ISSN
0001-4826
- Publication type
Article