New accounting rules could curb investment banking fees

Bad news for money-hungry college grads looking to cash in as investment bankers: New disclosure rules could change the way you're paid.

The Wall Street Journal reports (subscription required) that "New accounting rules are taking hold for mergers and acquisitions that will shine a perhaps scary light on just how much corporations pay the investment banks and bankers that advise them on deals."

Here's how it currently works: Companies that make acquisitions are now able to lump the "advisory fees" in with the price of the target company as part of the "goodwill" that is mainly used to cover the cost paid for the company above and beyond its book value. But new rules would require companies to disclose investment banking fees as a separate expense.

According to Dealogic, investment banking revenue fell 35% in 2008. New rules that require companies to show how much they're paying for advice on deals that generally end up destroying value could set the industry up for further declines.

If this keeps up, top business school graduates might have no choice but to take jobs that actually create something.