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Are mandatory disclosure decisions made strategically? The case of SAB 74 estimates preceding adoption of FIN 48

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  • Alexander, Raquel
  • Ettredge, Mike
  • Stone, Mary
  • Sun, Lili

Abstract

SEC Staff Accounting Bulletin No. 74 (SAB 74, U.S. Securities, 1987) requires registrants to provide information about the predicted financial statement effect of an enacted but not yet adopted accounting standard. The objectives of SAB 74 disclosures are to inform users the registrant will be required to adopt a new standard, and to assist users in assessing the impact of adoption on the registrant’s financial statements. Investors find SAB 74 disclosures useful for their decision-making (Davis-Friday et al., 1999, 2004). Some evidence suggests that the SEC also uses such disclosures (SEC, 2005). We investigate whether firms strategically disclose SAB 74 estimates in the context of one recently enacted accounting standard (ASC Topic 740, colloquially “FIN 48”).

Suggested Citation

  • Alexander, Raquel & Ettredge, Mike & Stone, Mary & Sun, Lili, 2011. "Are mandatory disclosure decisions made strategically? The case of SAB 74 estimates preceding adoption of FIN 48," Research in Accounting Regulation, Elsevier, vol. 23(2), pages 160-166.
    • Handle: RePEc:eee:reacre:v:23:y:2011:i:2:p:160-166
    DOI: 10.1016/j.racreg.2011.06.001
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    References listed on IDEAS

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    3. Walied Keshk & Hung‐Yuan (Richard) Lu & Vivek Mande, 2020. "How have US banks adopted the Financial Accounting Standards Board's Level 3 fair value disclosure rules?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 693-727, April.

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