Accounting Standards and Financial Market Stability: An Experimental Examination
Glenn Pfeiffer and
Economic Journal, 2017, vol. 127, issue 605, F545-F562
We examine the effects of three alternative accounting methods in an experimental asset market characterised by bubbles and crashes: fair value (M2M), historical cost (HC) and marked to fundamental value (M2F). Each treatment is replicated under both no‐leverage and leverage conditions. In the no‐leverage condition, we find that accounting methods do not have a significant effect on asset mispricing. In the leverage condition, both M2M and M2F accounting methods exacerbate asset mispricing. Yet, the two differ in leverage dynamics. M2F markets are completely immune to defaults, while M2M markets experience the most frequent and the most severe defaults.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers.
Journal Article: Accounting Standards and Financial Market Stability: An Experimental Examination (2017)
Working Paper: Accounting Standards and Financial Market Stability: An Experimental Examination (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:oup:econjl:v:127:y:2017:i:605:p:f545-f562.
Access Statistics for this article
Economic Journal is currently edited by Estelle Cantillon, Martin Cripps, Andrea Galeotti, Morten Ravn, Kjell G. Salvanes, Frederic Vermeulen, Hans-Joachim Voth and Rachel Kranton
More articles in Economic Journal from Royal Economic Society Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().