Reliability and relevance of fair values: private equity investments and investee fundamentals

Petrus H. Ferreira, Roman Kräussl, Wayne R. Landsman (), Maria Nykyforovych Borysoff and Peter F. Pope
Additional contact information
Petrus H. Ferreira: University of North Carolina at Chapel Hill
Wayne R. Landsman: University of North Carolina at Chapel Hill
Maria Nykyforovych Borysoff: George Mason University
Peter F. Pope: Bocconi University

Review of Accounting Studies, 2019, vol. 24, issue 4, No 9, 1427-1449

Abstract: Abstract We directly test the reliability and relevance of investee fair values reported by listed private equity funds (LPEs). In our setting, disaggregated fair value measurements are observable for funds’ investees; and investee accounting fundamentals are also publicly disclosed. We find that LPE fair value measurements reflect equity book value and net income in a manner consistent with stock market pricing of listed companies. However, LPE fair value measurements appear to distinguish between Level 1 and Level 3 inputs – they reflect investee net income to a lesser extent for Level 3 inputs. Further evidence based on the stock market pricing of LPE funds indicates that the discretion exercised by LPE fund managers when determining investee valuations is perceived as reliable.

Keywords: Listed private equity; Fair value measurement; Investee fundamentals (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s11142-019-09509-9 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:reaccs:v:24:y:2019:i:4:d:10.1007_s11142-019-09509-9

Ordering information: This journal article can be ordered from
http://www.springer.com/accounting/journal/11142

DOI: 10.1007/s11142-019-09509-9

Access Statistics for this article

Review of Accounting Studies is currently edited by Paul Fischer

More articles in Review of Accounting Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().