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An International Meeting of American Accounting
Association
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The Effect of SFAS No. 141 on the Transparency of Business Combinations Reporting: Evidence from the Initial Year of Implementation. |
Natalia Mintchik
University of Missouri - St. Louis
Abstract: This study examines the impact of SFAS No.141 on business combinations reporting. Specifically, I predict smaller analysts’ earnings forecast errors as a result of elimination of pooling and more informative disclosures for merging firms after the adoption of SFAS No. 141. I restrict my post-SFAS 141 sample to the initial year of SFAS 141 implementation. Such research design provides the unique opportunity to disentangle effects of SFAS No. 141 from simultaneously adopted SFAS No. 142 due to specific accounting treatment for goodwill impairment during this period. Overall, results from this study are consistent with expectations and provide evidence that SFAS No. 141 increased financial reporting transparency after mergers. However, this improvement in financial reporting transparency more likely follows from the extended disclosure requirements and the other required changes in purchase method than from the longly debated elimination of pooling.