In December 2007, the FASB revised accounting for business combinations and permitted firms to record a bargain purchase gain within current earnings at the completion of a business combination. Although the FASB contends that the new treatment improves the representational faithfulness of the...

Prior research shows that managers use discretion in estimating Level 3 financial instruments to opportunistically manage capital and earnings. We investigate an earlier decision, subsequent classification changes that result in net transfers into the Level 3 classification, to examine whether...

We examine the relationship between aggressive income-increasing real earnings management (REM) and current and future audit fees. Managers pursue REM activities to influence reported earnings and, as a consequence, alter cash flows and sacrifice firm value. We posit that the implications of REM...