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Scholarly literature has discussed why entities make voluntary accounting changes, and practice grapples with which change might be appropriate and when. Regulators have set forth a requirement that public companies file preferability letters with the Securities and Exchange Commission indicating the auditor's support for the particular change. Descriptive profiling of these letters from 1992 through 2004 leads to prescriptions that address practice challenges and regulators' expectations. Broad policy questions involve whether such changes ought to be permitted and what independence considerations arise as managers, directors, auditors, and regulators discuss and sometimes disagree on the preferred accounting principles.

After reporting a restatement, firms are motivated to improve their market credibility and enhance their information environment. One potential management strategy is to reach for "lightning rods," receiving substantial media attention: accounting changes associated with increased conservatism and transparency. Such an opportunity is provided in today's market in the form of stock options and variable-interest entities--kin to special-purpose entities, which evoked attention as a consequence of their role in the Enron debacle. Firms sending these high-profile accounting signals are rewarded. An "event-study" approach quantifies the boost in market-adjusted return experienced by the portfolio of firms when they send their signal. This evidence that signaling adds value for stockholders has implications for both policy setters and market participants. Considers from a corroborative and motivation perspective the quality of earnings monitoring analyses and governance "worst boards" listings.