We experimentally explore how common knowledge provided by accounting systems affects investors' decision and shapes the formation of security prices over time. We design alternative accounting structures and run experiments in artificial security markets framed by these structures. In sessions...

Since 2005 companies with equity instruments traded on regulated markets in the European Economic Area have prepared their financial reports in accordance with accounting standards issued by the IASB. A survey conducted in 2007 indicated that most of the EU companies that changed from local to...