Capital Market Response to SFAS Nos. 8 and 52

This study investigates the capital market response to Financial Accounting Standards Board (FASB) policy deliberations on foreign currency translations (FCT) by concentrating on five specific events associated with such deliberations. Examining the possible effects of these events, we argue that a market response to FASB policy deliberations on FCT could result from the effects of new information or from the effects of expected changes in managerial decisions. The tests utilized in this paper are designed to detect effects of both types. Generally, no apparent significant market reaction to three of the five events was observed. We found an apparent weak but significant reaction to one event and inconclusive results for a fifth. © 1993, SAGE Publications. All rights reserved