Faculty and Research

Karthik Ramanna is an assistant professor of business administration in the accounting and management unit at Harvard Business School. In the fall semester, he teaches the first-year M.B.A. course Financial Reporting and Control; in the spring semester, he co-teaches a doctoral seminar in empirical financial accounting research.

more

Featured Work

The implications of unverifiable fair-value accounting: Evidence from the political economy of goodwill accounting

I study the evolution of Statement of Financial Accounting Standard (SFAS) # 142, which uses unverifiable fair-value estimates to account for acquired goodwill. I find evidence consistent with the Financial Accounting Standards Board (FASB) issuing SFAS 142 in response to political pressure over its proposal to abolish pooling accounting: pro-pooling firms can be linked—via political contributions—to U.S. Congresspersons pressuring the FASB on this issue. This result is interesting given the proposal to abolish pooling was due in part to the Securities and Exchange Commission’s concerns over pooling misuse. I also find evidence consistent with lobbying support for SFAS 142 increasing in firms’ discretion under the standard. Agency theory predicts this unverifiable discretion will be used opportunistically. The results highlight the potential costs of unverifiable fair-value accounting.

The Politics and Economics of Accounting for Goodwill at Cisco Systems
HBS Case 108-021

Studies the role of Cisco in setting current U.S. accounting standards for acquisitions and goodwill. Explores two Cisco acquisitions, one under pooling-of-interests accounting, the other under purchase method accounting.