Theoretically,market values of assets are better for evaluating the creation of shareholder wealth than accounting numbers,but accounting numbers are used because they are more readily available.

Question

Quizplus · Accepted Answer

Market values of assets take into account the expectations and beliefs of market participants about the future cash flows and risks associated with an asset, which can provide a more accurate measure of the value created for shareholders. However, these values are often difficult to calculate and may not be readily available, so accounting numbers, such as net income or earnings per share, are more commonly used as proxies for measuring shareholder wealth.

Theoretically,market Values of Assets Are Better for Evaluating the Creation