The Usefulness of Fair Value Estimates for Financial Decision Making - a Literature Review

• Autorzy: Alfreda Sapkauskiene , Sergej Orlovskij

Warianty tytułu

Użyteczność szacowania wartości godziwej dla podejmowania decyzji finansowej - analiza literatury

• Języki publikacji: EN

Abstrakty

EN

The objective of this discussion is to answer the fundamental question: 'Are Fair Value estimates currently useful for financial decision making?' Through a systematic review we analyse the qualitative secondary data from dedicated scientific articles, based on the relevance and reliability of Fair Value estimates, and find out that there are still ongoing problems with reliability of information mainly because of the managerial estimation process and the 'human factor' in general. We identify 3 problem areas that are closely interconnected: (1) the business entity, (2) auditing, and (3) financial regulators and accounting academics. Each area has its own set of challenges and several suggestions are given to improve the reliability and relevance of Fair Value estimates, but a lot of those propositions require dedicated attention from accounting academics, financial regulators, and standard-setters. All in all, there is a clear trend that the situation with Fair Value estimates (especially those of Level 3) has been improving recently, and Level 3 estimates can indeed be used in the current financial decision process, but with some level of scepticism. (original abstract)

Celem dyskusji naukowej jest znalezienie odpowiedzi na pytanie fundamentalne: "Czy szacowanie wartości godziwej jest użyteczne dla podejmowania decyzji finansowych?" Analiza wtórnych danych jakościowych z artykułów naukowych stanowiących o wiarygodności oraz poprawności doboru metod szacowania wartości godziwej pozwoliła nam ustalić, że wiarygodność tych szacunków może być zachwiana poprzez procesy zarządcze oraz czynnik ludzki. Zidentyfikowaliśmy trzy obszary problemowe, które są ze sobą ściśle powiązane: (1) jednostka biznesowa, (2) audyt, (3) regulacje finansowe i rachunkowość akademicka. Dla każdego obszaru wyznaczyliśmy wyzwania i sformułowaliśmy sugestie w celu poprawy wiarygodności szacunków wartości godziwej. Jednakże wiele z tych propozycji wymaga uwagi akademików z rachunkowości ustawodawców przepisów rachunkowości oraz standardów. Jasne jest, że można zauważyć trend poprawy jakości szacunków wartości godziwej (głównie na poziomie 3), jednakże 3. poziom może być użyty w procesie podejmowania bieżących decyzji finansowych, ale z pewną dozą sceptycyzmu. (abstrakt oryginalny)

Słowa kluczowe

EN

Fair value; Value estimation; Credibility; Problem areas

PL

Wartość godziwa; Szacowanie wartości; Wiarygodność; Obszary problemowe

• Czasopismo: Zeszyty Teoretyczne Rachunkowości
• Rocznik: 2017
• Tom: 93
• Numer: nr 149
• Strony: 163--173

Twórcy

autor

Alfreda Sapkauskiene

• Kaunas University of Technology

autor

Sergej Orlovskij

• Kaunas University of Technology

Bibliografia

• Altamuro J., Zhang, H. (2013), The financial reporting of Fair Value based on managerial inputs versus market inputs: evidence from mortgage servicing rights, "Review of Accounting Studies", 18 (3), pp. 833-858.
• Barron O.E., Chung S.G., Yong K.O. (2016), The effect of Statement of Financial Accounting Standards No. 157 Fair Value Measurements on analysts' information environment, "Journal of Accounting and Public Policy", 35 (4), pp. 395-416.
• Baruch L., Li S., Sougiannis T. (2010), The usefulness of accounting estimates for predicting cash flows and earnings, "Review of Accounting Studies", 15 (4), pp. 779-807.
• Bratten B., Causholli M., Khan U. (2016), Usefulness of Fair Values for predicting banks' future earnings: evidence from other comprehensive income and its components, "Review of Accounting Studies", 21 (1), pp. 280-315.
• Bushman R.M., Landsman W.R. (2010), The pros and cons of regulating corporate reporting: A critical review of the arguments, "Accounting & Business Research", 40, pp. 259-273.
• Chung S.G., Goh B.W., Ng J., Yong K. O. (2017), Voluntary Fair Value disclosures beyond SFAS 157's three-level estimates, "Review of Accounting Studies", 22 (1), pp. 430-468.
• Danbolt J., Rees W. (2008), An experiment in Fair Value accounting: UK investment vehicles, "European Accounting Review", 17, pp. 271-303.
• DiGabriele J.A. (2016), The expectation differences among stakeholders in the financial valuation fitness of auditors, "Journal of Applied Accounting Research", 17 (1), pp. 43-60.
• Du H., Li S.F., Xu Z.R. (2014), Adjustment of valuation inputs and its effect on value relevance of Fair Value measurement, "Research in Accounting Regulation", 26, pp. 54-66.
• Fargher N., Zhang J.Z. (2014), Changes in the measurement of Fair Value: Implications for accounting earnings, "Accounting Forum", 38 (3), pp. 184-199.
• Fiechter P., Meyer C. (2010), Discretion in Fair Value measurement of banks during the 2008 financial crisis, Working Paper, University of Zurich.
• Goh B.W., Li D., Ng J., Yong K.O. (2014), Market Pricing of Banks' Fair Value Assets Reported under SFAS 157 since the 2008 Financial Crisis, "Journal of Accounting and Public Policy", Forthcoming.
• Griffith E.E., Hammersley J.S., Kadous K. (2015), Audits of Complex Estimates as Verification of Man-agement Numbers: How Institutional Pressures Shape Practice, "Contemporary Accounting Research", 32 (3), pp. 833-863.
• Hodder L.D., Hopkins P.E., Wahlen J.M. (2006), Risk-relevance of Fair Value income measures for commercial banks, "The Accounting Review", 81 (2), pp. 337-375.
• Hodder L.D., Hopkins P.E., Schipper K. (2014), Fair Value Measurement in Financial Reporting, "Foundations and Trends in Accounting", 8 (3-4), pp. 143-270.
• International Accounting Standards Board (IASB) (2010), International Accounting Standards Board conceptual framework for financial reporting, London.
• International Accounting Standards Board (IASB) (2011), IFRS 13, Fair Value measurement, London.
• Kieso D.E., Weygandt J.J., Warfield T.D. (2010), Intermediate Accounting, John Wiley, New York.
• Kolev K. (2008), Do investors perceive marking-to-model as marking-to-myth? Early evidence from FAS 157 disclosure, Working Paper, Yale University.
• Landsman W.R. (2007), Is Fair Value accounting information relevant and reliable? Evidence from capital market research, "Accounting and Business Research", Special Issue: International Accounting Policy Forum, pp. 19-30.
• Laux Ch., Leuz Ch. (2009), The Crisis of Fair Value Accounting: Making Sense of the Recent Debate, "Accounting, Organizations and Society", 34.
• Lawrence A., Siriviriyakul, S., Sloan, R. G. (2016), Who's the Fairest of Them All? Evidence from Closed-End Funds, "The Accounting Review", 91 (1), pp. 207-227.
• Magnan M., Menini A., Parbonetti A. (2015), Fair Value accounting: information or confusion for financial markets? "Review of Accounting Studies", 20 (1), pp. 559-591.
• Marra A. (2016), The Pros and Cons of Fair Value Accounting in a Globalized Economy: A Never Ending Debate, "Journal of Accounting and Finance", 31 (4), pp. 582-591.
• Martin R.D., Rich J.S., Wilks T.J. (2006), Auditing Fair Value measurements: A synthesis of relevant research, "Accounting Horizons", 20, pp. 287-303.
• Nissim D. (2003), Reliability of banks' Fair Value disclosure for loans, "Review of Quantitative Finance and Accounting", 20, pp. 355-384.
• Ronen J. (2008), To Fair Value or not to Fair Value: A broader perspective, "Abacus", 44, pp. 181-208.
• Siekkinen J. (2016), Value relevance of fair values in different investor protection environments, "Accounting Forum", 40 (1), pp. 1-15.
• Song C.J., Thomas W., Yi H. (2010), Value relevance of FAS No. 157 Fair Value hierarchy information and the impact of corporate governance mechanisms, "The Accounting Review", 85 (4), pp. 1375-1410.
• Song X. (2013), Fair Value accounting and market volatility, "Global Review of Accounting and Finance", 4 (2), pp. 1-17.
• Song X. (2015), Value Relevance of Fair Values-Empirical Evidence of the Impact of Market Volatility, "Accounting Perspectives", 14 (2), pp. 91-116.
• Vyas D. (2010), The timeliness of accounting write-downs by US financial institutions during the financial crisis of 2007-2008, "Journal of Accounting Research", 49, pp. 823-860.
• Watson M., Bauer G.W. (2005), Don't Bank On Strong Governance: Observations On Corporate Governance In U.S. Banks, Moody's Special Comment, August, Report Number 93743.
• Zyla M.L. (2012), Fair Value measurement: Practical guidance and implementation, John Wiley, Hobo-ken, NJ.

Identyfikatory

DOI

10.5604/01.3001.0010.3195