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A reply by the authors is presented to commentary by Robert R. Sterling and William Harrison on the article "Capital Market Equilibrium, Information Production, and Selecting Accounting Techniques: Theoretical Framework and Review of Empirical Work," included within the issue. The authors' thoroughly restate and clarify their initial conceptual paradigm, asserting that Sterling and Harrison misattribute their position and research design goals.

The article presents some empirical evidence on the influence of one kind of contemporary accounting message on investors' actions. Investors' actions result from investors' directed thinking processes. The objective of such processes is the construction of transformational strategies, each of which is a behavioral scheme that has some probability of transforming a problematic present state of affairs into a more desirable future state of affairs. The nature of the transformational strategies formulated by investors will be determined by the present beliefs, motives, attitudes, and expectations of investors. The transformational strategies formulated by an investor represent schemes for intervening in an empirical process in order to control his future experiences. During the construction of such strategies, events are predicted and the dimensions and scope of the control over empirical events that may be exercised by the investor are defined and evaluated. An investor's perceptual system is the medium with which the phenomena of the environment are noticed and registered in accordance with the network of concepts that governs the investor's perceptual processes.

A model based on an exponential decay function was formulated to deal with evaluation based on discrepancy. This evaluation concerns discrepancy based on attitudes and specifically hypothesizes that as discrepancy from one's ideal point increases, evaluation of a multidimensional stimulus object will decrease. The model was applied to experimental data dealing with the evaluation of political candidates and was found to give a very good fit for the obtained data. In addition, the parameters of the model were shown to be related to the intensity of an attitude, and it was further shown that the results could be interpreted in terms of the psychological concepts of latitudes of acceptance, rejection, and non-commitment. [ABSTRACT FROM AUTHOR]