Abstract
This paper reports on managements' choices of accounting methods when firms were able to choose between Statement of Financial Accounting Standards (SFAS) No. 8 or SFAS No. 52. For 1981 annual reports, managers of multinational corporations could select either SFAS No. 8, which requires translation gains or losses to be included in net income, or SFAS No. 52, which takes such gains or losses directly to the balance sheet. Having examined the annual reports of the largest industrial and commercial banking corporations which reported sufficient data on translation gains and losses, I conclude that the majority selected the accounting standard which increased their reported income.
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