Impact of FASB Qualitative Characteristics on the Promulgation of Statements of Financial Accounting Standards

Abstract

Generally Accepted Accounting Principles (GAAP) provide the basis for measuring, valuing, and presenting financial information to investors and creditors. The Financial Accounting Standards Board (FASB) promulgates GAAP through its Statements of Financial Accounting Standards (SFAS). To guide its thinking in the promulgation of SFAS, the FASB employs as conceptual framework, called Qualitative Characteristics of Accounting Information. This research effort uses content analysis to analyze the decision specific qualities of relevance and reliability captured from 120 SFAS issued by the FASB. The results provide us with an understanding of the relative importance of relevance and reliability in the promulgation of SFAS.