The Value Relevance of Fair Value Disclosures in Australian Firms in the Extractive Industries

Mohamat Sabri Hassan (), Majella Percy and Jenny Stewart
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Mohamat Sabri Hassan: School of Accounting, Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia
Majella Percy: School of Accountancy, Queensland University of Technology, Brisbane, Australia
Jenny Stewart: Department of Accounting, Finance and Economics, Griffith Business School, Griffith University, Queensland, Australia

Asian Academy of Management Journal of Accounting and Finance (AAMJAF), 2006, vol. 2, issue 1, 41-61

Abstract: We investigate whether fair value information is value relevant within Australian firms in the extractive industries. The Australian accounting standard on financial instruments AASB 139 Financial Instruments: Recognition and Measurement requires measurement of financial instruments based on fair values. This study provides evidence that net fair value information is value relevant. However, the significance of net fair value is limited to the recognised financial instruments and some settings. Further analysis provides evidence that the explanatory power of net fair value and the unrealised gain or loss beyond the book value and earnings valued at historical costs is very low. Classification-JEL:

Keywords: fair value; financial instruments; value relevance; incremental value; extractive industries (search for similar items in EconPapers)
Date: 2006
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