The debate over the elimination of pooling of interests accounting has intensified. In an article published earlier this year in the Wall Street Journal, Harvey Golub, chairman and CEO of American Express, was extremely critical of the Financial Accounting Standards Board (FASB) plan. Last year, special reports published by Merrill Lynch and U.S. Bancorp predicted that replacing pooling accounting with purchase accounting would create a serious impediment for mergers and have a serious impact on the mergers and acquisitions market. Statistics support these arguments, as more than 50 percent of all mergers were conducted through the pooling method of accounting between 1998 and 1999, and this year the numbers are no different. Yet, the two arguments used to support keeping pooling--that a merger with stock is fundamentally different from a purchase with cash, and that goodwill amortization under the purchase method reduces and distorts earnings for years and years--are both unsound notions. Pooling produces high, but meaningless, earnings numbers, and does not recognize the large amounts of money exchanging hands in the merger market. Two studies have found that firms that use purchase accounting see a significantly better stock performance than those that use pooling methods. The market seems to reward firms that use conservative purchase methods, so it would appear that the FASB is on the right track, despite intense opposition.