The Economic Impact of SFAS NO. 157

Sak Bhamornsiri (), Robert Guinn () and Richard Schroeder ()

International Advances in Economic Research, 2010, vol. 16, issue 1, 65-79

Abstract: Statement of Financial Accounting Standards No. 157, “Fair Value Measurements,” (SFAS 157) defines fair value, establishes a three tiered framework for measuring fair value and expands the required disclosures about fair value measurements. The objective of this study is to examine and evaluate the benefits of the information disclosed by SFAS 157. The results of our study indicated that a large majority of the inputs are observable in that 93.5% of the sample financial assets and 93.1% of the sample financial liabilities were measured by level 1 or 2 criteria. However, we found a mismatch between assets and liabilities subject to the three tiers of fair value measurements. The companies in our sample disclosed $18.8 trillion in total assets, with 51%, or $9.5 trillion reported at fair value. Whereas, sample company liabilities totaled $16.1 trillion with only $3.7 trillion or 23% reported at fair value. Copyright International Atlantic Economic Society 2010

Keywords: Economic impact; Fair value; SFAS 157; M41 Accounting (search for similar items in EconPapers)
Date: 2010
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DOI: 10.1007/s11294-009-9242-7

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