Cash Wealth Maximization: The Panacea

Riyadh Al-Abdullah, Bassam M. Abu-Abbas

Department of Accounting, College of Business Administration, University of Bahrain, P.O. Box: 32038, Kingdom of Bahrain.

*Corresponding Author’s E-mail: bassamabuabbas@hotmail.com;  

Tel (+973) 39089836.

Accepted 03 April, 2013

Abstract

The tendency of the most important documents related to the formulation of the objectives of financial reporting (statements) issued by the most influential professional accounting bodies (AICPA, FASB and IASB) in the world reflects a bias towards the provision of accounting information fundamentally relevant to the goal of cash wealth maximization. There are two assumptions; explicit and implicit. The explicit assumption is that the information needed to achieve the goals of all interested non-owners groups, the goal of  management accountability and social goals can simply be satisfied by the same accounting information required for achieving the goal of cash wealth maximization. The implicit assumption is that achieving the goal of cash wealth maximization would automatically lead to the attainment of other goals. Thus, the goal of cash wealth maximization is assumed to be panacea that solves all problems. This simply means that cash wealth maximization is the only prime goal that must be given the most priority when formulating the objectives of financial reporting (statements) which would lead to force homogeneity on what is fundamentally heterogeneous.  

Keywords: Cash wealth maximization, common information need, management accountability, panacea, social goals.