Tax Policy Implications of Legislating Accounting Change: The Case of S&L Goodwill and Tax Nols

Research in Accounting Regulation, Vol 11, 1997

Posted: 30 Apr 1997

See all articles by Anthony H. Catanach

Anthony H. Catanach

Villanova University - School of Business; The American College

Multiple version iconThere are 2 versions of this paper

Abstract

The Supreme Court recently ruled that the U.S. government breached its contracts with several acquirers of insolvent savings and loans (S&Ls, thrifts) when it mandated goodwill write-offs in 1989. This study shows that investors recorded tax attributes (net operating losses and built-in losses) received in these regulatory-assisted mergers as goodwill. Consequently, goodwill write-offs were overstated by the value of tax attributes and regulatory enforcement actions against many S&Ls may have been premature. This study's results will interest regulators, thrift owners, and lawyers who currently are litigating "breach of contract" suits. The study also provides insights into the interaction of legislative policy with accounting, the regulatory process, and the general conduct of business.

JEL Classification: M41, L50, G21

Suggested Citation

Catanach, Anthony H., Tax Policy Implications of Legislating Accounting Change: The Case of S&L Goodwill and Tax Nols. Research in Accounting Regulation, Vol 11, 1997, Available at SSRN: https://ssrn.com/abstract=10442

Anthony H. Catanach (Contact Author)

Villanova University - School of Business ( email )

Dept. of Accountancy
Villanova, PA 19085
United States
610- 519-4825 (Phone)
610-519-5204 (Fax)

The American College ( email )

Bryn Mawr, PA 19010
United States

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