The Impact of the FASB's 1974 GPL Proposal on the Security Price Structure.

Abstract ABSTRACT: The study investigates the effect on security prices of the FASB's 1974-1976 deliberations in the inflation accounting issue. The test period is divided into two segments, one corresponding to initial consideration by the FASB of a proposal requiring supplemental general price-level adjusted financial reformation, and another corresponding to withdrawal of the proposal. This reversal-in-position setting, along with secondary analysis tests, substantially screens test results from a "correlated events" criticism. The results do indicate that there was a market reaction to the inflation accounting deliberations.