THE MAGNITUDES OF FINANCIAL STATEMENT EFFECTS AND ACCOUNTING CHOICE -THE CASE OF THE ADOPTION OF SFAS-87

We examine the accounting choice decision in the context of the timing of adoption of SFAS 87. Unlike most prior studies, we consider intera ctions between firm characteristics and the magnitudes of the financia l statement effects of an accounting decision. We expect that includin g interactions will both enhance the ability to explain accounting cho ice, and facilitate distinction between omitted variables (Ball and Fo ster, 1982) and hypothesized relations. Results are consistent with th ese expectations.