Fair Values and Private Companies

In the most recent The Accounting Review (Vol. 87, No. 2), Caskey and Hughes examine how alternative fair value (FV) measures affect the ability of debt covenants to mitigate suboptimal investment decisions.  A primary result from the paper is that the FASB’s “highest and best use” measure of fair value is dominated by more conservative [...] Read more > >

Sir David Tweedie is an “Accounting Rock Star”

…or so says The Economist in this article. While I generally think highly of the The Economist, this article contains one of my pet peeves, which is a loose discussion of fair value. In particular, the article states that “In 2009, under its previous chairman, Bob Herz, FASB narrowly voted 3-2 that all assets should [...] Read more > >

Some observations from recent Round Table

Last Wednesday, I enjoyed our most recent FASRI Round Table.  Ben Couch discussed the new guidance for making Fair Value Measurements (hereafter, FVM) as well as the new disclosures about FVM.  Part of the discussion centered distinguishing between level 2 and 3 measurements.  For a FVM that uses some market information, how does the accountant [...] Read more > >

Round table on Level 2 and level 3 fair valuation and ASU 2011-04

Update: Here are two slide decks related to the session described below:  First click on “Read more” below and then click here for the first slide deck. First click on “Read more” below and then click here for the second slide deck. Unfortunate technological difficulties prevented us from recording the session.   The FASRI Round [...] Read more > >

Fair Value and Feedback Effects: Roundtable with Rich Frankel

UPDATE:  AUDIO FOR THE SESSION IS HERE. Our next FASRI roundtable is scheduled for 4pm-5pm ET Wednesday, November 17th.  Richard Frankel (Washington University) will be joining us to talk about his recent paper, Panacea, Pandora’s Box, or Placebo: Feedback in Bank Mortgage-based Security Holdings and Fair Value Accounting.  The paper continues several themes that FASRI [...] Read more > >

Can a Good Audit Be a Systemic Threat?

Isn’t disclosure always a good thing?  Isn’t it always better to have audited financial statements than not (ignoring the cost of the audit itself)? Wouldn’t it be particularly important to audit a large bank?  How about one that holds our entire financial system in its hands…such as the Federal Reserve Bank? I was very surprised [...] Read more > >

SEC Chief Accountant Questions Convergence by June 2011

A recent Journal of Accountancy article states that the SEC Chief Accountant Jim Kroeker would support the FASB’s cutting the number of convergence projects due for completion in 2011. Here’s one excerpt from that article: “June 30, 2011, is an arbitrary deadline and it’s not one that’s been put in place by the SEC or [...] Read more > >

Round Table Discussion on Information Risk and Fair Value

On Wednesday, April 14th, 11 am ET, we will be joined by Eddie Riedl (Harvard University). Eddie will discuss on-going research relating to fair value accounting. This will include a paper co-authored with George Serafeim (also of Harvard University), entitled “Information Risk and Fair Values: An Examination of Equity Betas.” He will both overview an [...] Read more > >

Follow up on March 2009 mark to market hearing

About a year ago (March 12, 2009) the House Financial Services Subcommittee on Capital Markets, Insurance, and Government Sponsored Entities held a hearing titled “Mark-to-Market Accounting: Practices and Implications.”  The Committee members directed several hours of fairly hostile questioning to FASB Chairman Bob Herz and SEC Chief Accountant Jim Kroeker.  If you have not seen [...] Read more > >

Roundtable: Do Fair Values Predict Future Financial Performance?

Mark Evans of Indiana University will lead our next roundtable discussion, Wednesday March 3rd, 11am ET).  Here is the abstract from his recent paper, written with Leslie Hodder and Pat Hopkins, exploring fair value in commercial banks: For a sample of commercial banks during 1994–2008, we find that accumulated fair value adjustments for investment securities [...] Read more > >