 The effect of principles-based standards on financial statement comparability: The case of SFAS-142Anthony Chen, Gong, James (Jianxin) and Lu, Richard (Hung-Yuan) Advances in accounting, 2020, vol. 49, issue C Abstract: This study examines the effects of a prominent principles-based standard (SFAS-142, Goodwill and Other Intangible Assets) on financial statement comparability. Using non-goodwill-intensive firms as our control group, we implement a difference-in-differences research design to examine how SFAS-142 affects comparability among goodwill-intensive firms (i.e. a treatment group), and comparability between goodwill-intensive firms and non-goodwill-intensive firms (i.e. another treatment group). We find that SFAS-142 decreases comparability among goodwill-intensive firms, as well as comparability between goodwill-intensive and non-goodwill-intensive firms. We also find that these reductions in comparability are less severe when the verifiability of net assets is higher. Overall, the results suggest that principles-based standards may reduce comparability, particularly when the accounting items entail high uncertainty and verifiability is low. Keywords: Comparability; Principles-based standards; Verifiability; Goodwill (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:advacc:v:49:y:2020:i:c:s0882611020300444 DOI: 10.1016/j.adiac.2020.100474 Access Statistics for this article Advances in accounting is currently edited by Dennis Caplan More articles in Advances in accounting from Elsevier |
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