The Social Value of FASB

Ramanna (this issue) argues that the FASB’s new Conceptual Framework deemphasizes reliability in favor of representational faithfulness to facilitate the FASB’s promotion of an “asset-liability” approach measured at fair values. More importantly, Ramanna argues that this change is likely to generate costly unintended consequences by reducing reporting quality. We agree and consider more broadly whether FASB standards benefit the investors and creditors whom it anoints as primary beneficiaries, whether FASB creates social value through better accounting knowledge, and whether it is time to sunset the FASB monopoly