Managerial ability and fair value accounting: evidence from nonfinancial firms

Wray Bradley and Li Sun

Journal of Financial Reporting and Accounting, 2021, vol. 19, issue 4, 666-685

Abstract: Purpose - The purpose of this study is to examine the relation between managerial ability and fair value inputs (measured as fair value intensity) for nonfinancial firms. Design/methodology/approach - This study uses regression analysis to investigate the impact of managerial ability on the level of fair value inputs. Findings - This study finds significant and positive relations between managerial ability and use of Level 1 and Level 2 fair value inputs. On the other hand, this study finds an insignificant relation between managerial ability and Level 3 inputs. Originality/value - The findings contribute to two research streams. To the best of the author’s knowledge, this is perhaps the first study that directly examines the link between managerial ability and fair value inputs.

Keywords: Managerial ability; Fair value accounting; Fair value inputs; ASC 820; Accounting standard; M40; M49 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrapp:jfra-08-2020-0229

DOI: 10.1108/JFRA-08-2020-0229

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