Reliability of Level Three Valuations and Credit Crisis

Arber H. Hoti () and Elvira K. Hoti ()
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Arber H. Hoti: University of Prishtina, Republic of Kosovo
Elvira K. Hoti: University of Prishtina, Republic of Kosovo

Acta Universitatis Danubius. OEconomica, 2012, issue 1(1), 5-13

Abstract: This research paper evaluates the impact of level three valuations in accordance with FAS 157 and its impact on investors, auditors’ work, and valuation. The objective of this research is to demonstrate that the fair value measurements should not be suspended. The standards provide for measurement of fair value in all market conditions. Therefore, level 3 measurements or mark-tomodel is an answer for many issuers that are not sure how to measure their assets and liabilities at the fair value. The paper concludes that fair value measurement has not caused the current crisis and has no pro-cyclical effect and suggests several recommendations for policy makers and regulators

Keywords: Level three valuations; mark-to-model; FAS 157; financial reporting; disclosures (search for similar items in EconPapers)
Date: 2012
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