Fair value accounting: Simulacra and simulation

Philip D. Bougen and Joni J. Young

CRITICAL PERSPECTIVES ON ACCOUNTING, 2012, vol. 23, issue 4, 390-402

Abstract: The paper examines the application of simulacra and simulation in fair value accounting for financial instruments in the U.S. As copies of copies, simulacra problematize the notion of an original and with it an imaginary of a single authentic reality. We examine simulacra as they have been applied in two interconnected fair value accounting arenas. Firstly, simulacra employed as a measurement basis for certain financial instruments. In this regard, we challenge the FASB's insistence that fair value accounting is an originary market based measurement system. Secondly, we examine the process of simulation as employed by the FASB in copying and amending FAS 157 in its subsequent modifications to the guidance provided to the preparers of financial statements. Our purpose here is to both reinforce the absence of a market reality and also to illustrate how the FASB's subsequent modifications to FAS 157 were shaped by political forces. We conclude with some suggestions as to how simulacra and a politicization process might be productively embraced in future fair value accounting endeavors.

Keywords: Critical; Public interest; Derivatives; Markets; Simulacra; Critique; Intérêt public; 批判性; 公共利益; Crítica; Interés Público (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:crpeac:v:23:y:2012:i:4:p:390-402

DOI: 10.1016/j.cpa.2011.05.004

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