The Effect of Accounting Standards on Investment Decisions: The Case of SFAS 94
Posted: 15 Jul 1998
Date Written: Undated
This paper uses the implementation of SFAS 94 to demonstrate that accounting standards can affect real investment decisions. SFAS 94 requires that firms consolidate nonhomogeneous subsidiaries. Shortly before its implementation, a number of firms with finance subsidiaries disposed of these subsidiaries. I provide evidence consistent with the contention that SFAS 94 influenced the disposal decision.
JEL Classification: G31, M41
Suggested Citation: Suggested Citation