How do financial analysts welcome the fair value model?

SFAF Accounting and Financial Analysis Commission

Revue d'Économie Financière, 2003, vol. 71, issue 2, 137-139

Abstract: [eng] The fair value method, which should be adopted within two years by listed companies in preparing their financial statements, aims to give preference to the use of market values for reporting assets and liabilities, if the information is available, or failing this, values in use calculated by the enterprise. To justify the adoption of the fair value method, the accounting standard-setters have no hesitation in stating that it meets the demands of investors and financial analysts. These same analysts would like to express here their strong reserves regarding the introduction of the fair value concept, which could well make both balance sheet and income statement more difficult ta read and interpret, by giving preference to the balance sheet to the detriment of the income statement. Although commendable in its principle, the fair value concept could in practice result in further erosion of investor confidence in both accounting and enterprises. . JEL classifications : M41

Date: 2003
Note: DOI:10.3406/ecofi.2003.4752
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