Posted by Urooj Khan, Columbia University, on Saturday, April 29, 2017
Editor's Note: Urooj Khan is Class of 1967 Associate Professor of Business at Columbia Business School. This post is based on a recent paper by Professor Khan; Bin Li, Assistant Professor at University of Texas at Dallas Naveen Jindal School of Management; Shivaram Rajgopal, Roy Bernard Kester and T.W. Byrnes Professor of Accounting and Auditing at Columbia Business School; and Mohan Venkatachalam, R.J. Reynolds Professor of Business Administration at Duke University Fuqua School of Business.
For four decades, the Financial Accounting Standards Board (FASB) has been the designated private sector organization for setting up standards governing financial reporting for corporate America. During this time, over 160 standards have been issued along with several supporting American Institute of Certified Public Accountants (AICPA) bulletins, which are interpretations and statements of positions intended to offer implementation and supportive guidance for the standards. The FASB asserts that its standards are important to the efficient functioning of the economy because credible and understandable financial information is useful for capital allocation in the economy.