Joint accounting choices: an examination of firms’ adoption strategies for SFAS No. 106 AND SFAS No. 109

Joint accounting choices: an examination of firms’ adoption strategies for SFAS No. 106 AND... We provide insight into an argument that firms minimize the costs imposed by new accounting standards through their adoption choices. Focusing on two standards with potentially large impacts on both balance sheet and income statement accounts for many firms, we present evidence that firms chose their strategies for SFAS No. 106 (OPEB) and 109 (DTAX) jointly rather than separately. We also provide insight into how firms view recurring versus non-recurring charges, and how they weigh the tradeoff between a large one-time (income decreasing) charge against the smaller, but longer lasting effects of amortization. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Joint accounting choices: an examination of firms’ adoption strategies for SFAS No. 106 AND SFAS No. 109

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Publisher
Springer US
Copyright
Copyright © 2007 by Springer Science+Business Media, LLC
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1007/s11156-007-0045-8
Publisher site
See Article on Publisher Site

Abstract

We provide insight into an argument that firms minimize the costs imposed by new accounting standards through their adoption choices. Focusing on two standards with potentially large impacts on both balance sheet and income statement accounts for many firms, we present evidence that firms chose their strategies for SFAS No. 106 (OPEB) and 109 (DTAX) jointly rather than separately. We also provide insight into how firms view recurring versus non-recurring charges, and how they weigh the tradeoff between a large one-time (income decreasing) charge against the smaller, but longer lasting effects of amortization.

Journal

Review of Quantitative Finance and AccountingSpringer Journals

Published: Sep 26, 2007

References

  • The use of accounting flexibility to reduce labor renegotiation costs and manage earnings
    D’Souza, J; Jacob, J; Ramesh, K
  • Empirical research on accounting choice
    Fields, T; Lys, T; Vincent, L
  • Is the selection of the amortization period for goodwill a strategic choice?
    Henning, S; Shaw, W

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