Anatomy of a Meltdown

Journal of Accounting, Ethics, and Public Policy, 11(1), 65-85 (2010)

21 Pages Posted: 16 Jul 2012

See all articles by Miriam Gerstein

Miriam Gerstein

Brooklyn College

Dina Yankelewitz

The Richard Stockton College of New Jersey

Date Written: December 31, 2010

Abstract

Critics have blamed FAS 157 for exacerbating the global economic crisis of 2008. This paper investigates the links between Enron, the reintroduction of fair value accounting, the implementation of FAS 157, and the subprime mortgage crisis of 2008. The account describes the possible connections between these events and shows that the implementation of the Sarbanes-Oxley Act was pivotal in determining the role that fair value accounting played in the economic crisis. The study highlights the great influence that public policy has on accounting practice, and the drastic consequences that such influence, although unforeseen, can bring about.

Keywords: ethics, accounting, Sarbanes-Oxley, FAS 157, subprime mortgage crisis

Suggested Citation

Gerstein, Miriam and Yankelewitz, Dina, Anatomy of a Meltdown (December 31, 2010). Journal of Accounting, Ethics, and Public Policy, 11(1), 65-85 (2010), Available at SSRN: https://ssrn.com/abstract=2108474

Miriam Gerstein (Contact Author)

Brooklyn College ( email )

New York, NY
United States

Dina Yankelewitz

The Richard Stockton College of New Jersey ( email )

101 Vera King Farris Drive
Galloway, NJ 08205
United States

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