Fair Value Study: Hot off the Presses

Mark Evans, Leslie Hodder and Pat Hopkins just posted a paper on SSRN indicating some benefits to fair value accounting in financial institutions.  From the abstract: For a sample of commercial banks during 1994–2008, we find that accumulated fair value adjustments for investment securities are positively associated with realized income from investment securities in the [...] Read more > >

Roundtable Discussion: Stephen Ryan

Stephen Ryan (NYU) joins FASRI to talk about his recent research on the fair value option in the banking industry.  Stephen is one of the most respected accounting academics studying banking and financial instruments these days, so I expect people will have plenty of questions beyond the research study that will form the heart of [...] Read more > >

Measuring onerous contracts under IAS 37 and the proposed revenue recognition model

I was excited this past week to read that the IASB recently published a second exposure draft on a portion of IAS 37 Provisions, Contingent Liabilities, and Contingent Assets. I know, excitement might be too strong of a word, but I was looking forward to seeing whether the IASB’s decision on how to measure onerous [...] Read more > >

Loan Loss Accounting

Typically at the start of every New Year, we spend time thinking about the prior year and all the interesting and exciting events that have happened. 2009 was certainly a banner year for accounting standard setting. As I was thinking back over all that happened and trying to determine what was the most surprising thing [...] Read more > >

Leisenring: IFRS 9 Abuse “Inevitable”

Somehow I ended up on the mailing list of Risk.Net, which hails itself as “The world’s leading monthly magazine dedicated to the risk management and derivatives industries.”  In this week’s top story, headlined “Abuse of revised IFRS standards “inevitable” – IASB’s Leisenring“, Jim is quoted as expressing concern about using management intent to determine how [...] Read more > >

New Support and Opposition on Perlmutter Amendment

We reported last week on the Perlmutter amendment.  In the typically understated fashion of accounting professors, the AAA-FASC wrote a letter opposing it. Such an amendment would shift the power to promulgate accounting standards from the Financial Accounting Standards Board (FASB) to a Systemic Risk Oversight Council, and it would shift the objectives of financial [...] Read more > >

Stephen Penman Leads Roundtable Discussion

You may know Columbia Business School Professor Stephen Penman as the 14th-most downloaded author on SSRN.  Or you might know him as a Director of the Center for Excellence in Accounting and Security Analysis. Or perhaps as author of Financial Statement Analysis and Security Valuation. More recently, Stephen has been visible as a critic of [...] Read more > >

Fair Value, the Financial Crisis, and Some Nice Distinctions By Laux and Leuz

Christian Leuz emailed me with a link to his recent paper with Christian Laux, entitled “Did Fair-Value Accounting Contribute to the Financial Crisis.”  He thought it might be of interest to our readership, and having spent some time with the paper this morning, he is right. In short, the paper’s answer is “no,”  which is [...] Read more > >

Does an asset-liability approach inevitably lead to fair value?

I’ve heard some people express the opinion that the FASB’s recent emphasis on an asset-liability approach is just a thinly veiled attempt to move financial reporting more in the direction of fair values. Ignoring the fact that the primacy of assets and liabilities is as old as the conceptual framework itself, I think recent evidence [...] Read more > >

Fair Value Quiz

What industries have the largest percentage of their assets measured under fair value standards?  Whisper your answer to the person sitting next to you before clicking to see the answer, courtesy of this paper by Gartenberg and Serafeim of HBS. Read more > >