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To examine whether the provisions of SFAS No. 142 allow for the earnings management technique termed “big bath” and whether firm size plays a role in earnings management.

A random selection of companies with December 31, 2002 fiscal year‐ends yielded 120 firms that reported goodwill impairments in 2002 and 82 firms that did not. The firms are then stratified into two groups. Analysis consists of measuring the magnitude of the 2002 goodwill impairment loss, comparing financial metrics of impaired and non‐impaired firms, and calculating the proportion of firms with negative versus positive earnings.

The results suggest that SFAS No. 142 adoption allowed companies to engage in earnings management. Findings indicate that small firms experienced a significantly greater negative impact and were much more likely than large firms to take big bath charges.

This study provides evidence on the use of newly issued accounting standards to manage earnings.

This paper seeks to examine whether companies are providing transparent financial disclosures in compiling with the provisions of SFAS No. 142, “Goodwill and Other Intangible Assets”, and to determine whether the adequacy of these disclosures is impacted by firm size.

The authors conducted a random sample of companies that reported goodwill impairments for the first year of adoption of SFAS No. 142. The firms were then stratified into three groups according to asset size. Subsequent analysis consisted of assessing the financial transparency of companies' goodwill reporting practices in total and by firm size, utilizing an approach suggested in Adams.

The study's findings suggest that many companies are not willing to provide additional voluntary disclosures to improve financial transparency, despite having the necessary information easily accessible. It also found that compliance with the provisions of SFAS 142 was sporadic and unpredictable.

This study provides evidence that companies are not providing transparent financial information.