Asset Revaluation Regulation
نویسندگان
چکیده
GAAP mandates a variety of departures from historical cost asset valuation. Here we o¤er a simple model that leads to such variety, depending on regulatory objectives and the magnitude of various economic forces. The central feature of the model is entrepreneurial investment in an asset followed by private information that cannot be communicated. A lemons problem arises in the asset resale market, opening the door for mandated disclosure which takes the form of audited asset revaluation. We nd that optimal revaluation policies can encompass the wide variety of seemingly disparate approaches to revaluation that is characteristic of GAAP.
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