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The implementation effects of expanded consolidation: the case of consolidating special purpose entities

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  • Ting Luo
  • Terry Warfield
  • Peter Clarkson

Abstract

type="main" xml:id="acfi12004-abs-0001"> This article examines the impact of FASB Interpretation No. 46 (Revised), FIN 46(R), on perceived earnings informativeness of companies with special purpose entities (SPEs). We find that the impact depends on the pre-FIN 46(R) incentives for using SPEs. The implementation of FIN 46(R) improves perceived earnings informativeness of companies that previously used SPEs less for the manipulation of financial reporting, but does not generate the same improvement for those otherwise. Furthermore, these differential effects are more pronounced when companies reacted to FIN 46(R) by restructuring their SPEs to keep them off financial statements.

Suggested Citation

  • Ting Luo & Terry Warfield & Peter Clarkson, 2014. "The implementation effects of expanded consolidation: the case of consolidating special purpose entities," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 54(2), pages 539-566, June.
    • Handle: RePEc:bla:acctfi:v:54:y:2014:i:2:p:539-566
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    File URL: http://hdl.handle.net/10.1111/acfi.2014.54.issue-2
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    Cited by:

    1. Minkwan Ahn & Samuel B. Bonsall & Zahn Bozanic & Yiwei Dou & Gordon Richardson & Dushyantkumar Vyas, 2020. "Have SFAS 166 and SFAS 167 improved the financial reporting for securitizations?," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 47(7-8), pages 821-857, July.

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