According to IFRS 7, banks have to disclose the inputs used in measuring the fair value of financial instruments. For this purpose the standard defines a three-level measurement hierarchy. The reliability of fair values is expected to decrease with decreasing hierarchy level due to the lower quality of the input factors. Using a value relevance research setting, I find that investors perceive t...

Fundamental economic principles provide a rationale for requiring financial institutions to use mark-to-market, or fair value, accounting for financial reporting. The recent turmoil in financial markets, however, has raised questions about whether fair value accounting is exacerbating the problems. In this paper, we review the history and practice of fair value accounting, and summarize the lit...

We support the Board’s efforts to enhance the disclosures about financial instruments and to converge the disclosure requirements with Statement of Financial Accounting Standards No. 157, Fair Value Measurements (Statement 157), issued by the U.S. Financial Accounting Standards Board (FASB). We believe the proposal to converge with the fair value hierarchy disclosures in Statement 157 is approp...

In his paper, Professor Landsman reviews research on both the relevance and reliability of reporting fair values for loans and other financial instruments (Landsman (2005)). Accounting standard setters define fair value as the amount that would be paid or received for the item being valued in an arm’s length transaction between knowledgeable parties. This is a market value definition and the st...

Accounting information is presented in financial statements as one of the that investors need to make best judgment. The reaction release accounting indicates degree value relevance information. This study aimed examine through earnings, book equity, and fair on non-financial assets. used 21 LQ45 Index companies listed Indonesia Stock Exchange (IDX) from 2018-2021. Multiple linear regression wa...

The FASB has converged SFAS 123R with IFRS No.2, which simultaneously defines that the value of stock compensation is an expense under fair value method that must be recognized in the current statement of operations. However, under the fair value method, volatility of the market value of stock is easily subjected to the business cycle, political condition, managerial behavior, and macroeconomic...

Introduced in late-2007, SFAS 157 redefined existing accounting standards concerning fair value accounting and significantly impacted financial reporting for financial institutions. Prior studies, using larger samples of financial firms, have concluded that Level 3 fair values (the most opaque and subjective fair values) were heavily discounted by the market. Consistent with prior studies, this...