Article,
The implications of unverifiable fair-value accounting: Evidence from the political economy of goodwill accounting
Journal of Accounting & Economics, 45 (2/3): p253 - 281 (20080801)
Abstract
Abstract: I study the evolution of SFAS 142, which uses
unverifiable fair-value estimates to account for acquired goodwill. I
find evidence consistent with the FASB issuing SFAS 142 in response to
political pressure over its proposal to abolish pooling accounting. The
result is interesting given this proposal was due in part to SEC
concerns over pooling misuse. I also find evidence consistent with
lobbying support for SFAS 142 increasing in firms’ discretion under the
standard. Agency theory predicts such unverifiable discretion can be
used opportunistically. Copyright 2008 Elsevier Copyright of Journal of
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