Discussion of 'The Implications of Unverifiable Fair-Value Accounting: Evidence from the Political Economy of Goodwill Accounting'

Abstract

Ramanna (2007) provides interesting and novel evidence on how firms use contributions from their political action committees (PACs) to members of Congress as a means of lobbying for preferred positions on the two exposure drafts that led to SFAS-141 and SFAS-142. My discussion raises some concerns about his main conclusion: that pooling firms lobbied the FASB to obtain a fair value based impairment rule to facilitate their ability to manipulate financial statements. I offer a more benign explanation and make some other observations about how this line of research could proceed in the future.

Keywords: Lobbying, Fair value, Accounting Standards

JEL Classification: M41, M44