Some Problems in Applying an Information Theory Approach to Accounting Aggregation

Abstract

In a recent article in this journal,' Baruch Lev described how information theory may be used to help determine information loss due to aggregation in financial statements. We acknowledge that the use of information theory in this way appears to be promising. However, there still remain some problems of aggregation which this approach does not resolve. The purpose of this note is to consider these problems within the context of Lev's' methodology.