 The effect of additional guidance on fair value measurement and disclosure in illiquid or inactive marketsMariah Webinger, Matt Comer and Robert Bloom Research in Accounting Regulation, 2013, vol. 25, issue 2, 220-229 Abstract: This paper examines fair value accounting – specifically, the application of FASB FSP 157-4 in the US. Data is analyzed from financial firms before and after FSP 157-4 was implemented to examine how this standard changed fair valuations and disclosures. We consider whether managers took advantage of the flexibility in the new standard by classifying their assets at level 3. We find that there is no significant change in the amount of assets that are transferred into level 3 after FSP 157-4 as compared to before. We also find a significant increase in the extent of disclosures as measured by word count. Fair value disclosures increased by an average of 52%. After further partitioning the sample based on size, we find that both main results hold for small and big firms in our additional sample. There is no evidence managers used the flexibility of the new standard to classify more financial assets at level 3; however, managers responded to the new standard with a significantly longer disclosure. Keywords: Fair value accounting; Disclosure requirements; Illiquid markets; FSP 157 (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:reacre:v:25:y:2013:i:2:p:220-229 DOI: 10.1016/j.racreg.2013.08.009 Access Statistics for this article Research in Accounting Regulation is currently edited by G. Previts More articles in Research in Accounting Regulation from Elsevier |
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