SFAS 142 requires managers to estimate the current fair value of goodwill to determine goodwill write-offs. In promulgating the standard, the FASB predicted managers will, on average, use the fair value estimates to convey private information on future cash flows. The current fair value of...

I study the evolution of Statement of Financial Accounting Standard (SFAS) # 142, which uses unverifiable fair-value estimates to account for acquired goodwill. I find evidence consistent with the Financial Accounting Standards Board (FASB) issuing SFAS 142 in response to political pressure over...

We examine how Big N auditors' changing incentives impact their comment-letter lobbying on U.S. GAAP over the first thirty-four years of the FASB (1973-2006). We examine the influence of auditors' lobbying incentives arising from three basic factors: managing expected litigation and regulatory...

We examine how the tightening of the U.S. auditing oligopoly over the last twenty-five years-from the Big 8 to the Big 6, the Big 5, and, then, the Big 4-has affected the incentives of the Big N, as manifest in their lobbying preferences on accounting standards. We find, as the oligopoly has...

In a capitalist system based on free markets, do managers have responsibilities to the system itself? If they do, should these responsibilities shape their behavior when they are engaging in the political process in an attempt to structure the institutions of capitalism? The prevailing...

I develop the notion of “thin political markets.” These are esoteric areas of market rule-making where corporate managers possess the technical expertise necessary for informed regulation, enjoy strong economic interests in the outcome, and face little political opposition. The motivating...

In 2010, the U.S. accounting rulemaker (FASB) updated its longstanding constitution to eliminate “reliability” as a fundamental accounting property. FASB argued that “reliability” was misunderstood in practice and that this amendment clarified its original intent. Drawing on primary...