Accounting and Finance

We have witnessed a series of surprising collapses of large companies and seen one of the largest accounting firms disappear from the scene within a very short time. Thus, the accounting model – which is largely based on historic cost – is being challenged, and a substantial amount of resources is spent on improving it. Strong arguments are raised in favor of valuation of assets at market value and also of strengthening the corporate governance of businesses. On the financial scene, the focus is on capital markets and on the invention of new financial instruments, one of the most recent being covered bonds. These are some of the starting points for the modern research in accounting and finance. The accounting and finance research at the University of Southern Denmark builds on a microeconomic foundation in which information, uncertainty, and incentives are key terms.

Society is characterized by increasingly complex interconnections among economics, organizations, and society. This complexity is partly explained by the widespread use of modern financial instruments and the reporting thereof in the financial statements. Another part of the explanation is that an ever increasing share of assets is made up of knowledge and other intangibles. The fact that modern society is an information society where news spreads fast and through many different channels is a third explanation. Moreover, agent incentives and incentive pay systems play an important role for business activities implying that the role and interpretation of financial statements have changed. Thus, modern accounting research focuses on the financial statement as a source of information, and it includes the relevant aspects of the organizational context. The financial statement measures the financial standing of the business, and this measure is used to create incentives in the organization. In this way, there is a dynamic link between accounting and activities in the organization.

The central topics of research in finance are investments by businesses and individuals, financing, and risk management. The research revolves around an understanding of valuation in capital markets and the risks associated with investment in financial assets. The Finance Group conducts research in corporate investments and valuation of the assets and liabilities, in private consumption, savings, and investments over the life cycle, as well as in the link between stock and bond prices and economic growth and house prices.

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