Discussion of “The financial reporting of fair value based on managerial inputs versus market inputs: evidence from mortgage servicing rights”

Bradley E. Hendricks and Catherine Shakespeare ()
Additional contact information
Bradley E. Hendricks: University of Michigan
Catherine Shakespeare: University of Michigan

Review of Accounting Studies, 2013, vol. 18, issue 3, No 11, 859-867

Abstract: Abstract Contrary to the guidance provided by regulators and industry associations suggesting that mortgage servicing rights (MSRs) be recorded as Level 3 assets, Altamuro and Zhang identify that 25 % of banks classify them as Level 2 assets. This variation in the asset classification of a single asset type provides a unique setting to examine the role of inputs in the fair value measurement process. Altamuro and Zhang find that the fair value of MSRs based on managerial inputs (Level 3) better reflects the economics of the underlying assets than the fair value of MSRs based on market inputs (Level 2). This discussion examines the institutional features of the MSR market, particularly the market concentration and the illiquidity of the market, that are important when considering this result. The discussion also raises a number of questions about the inputs used in the fair value process and calls for further research on this topic.

Keywords: Mortgage servicing rights; Fair value; Market inputs; Managerial inputs; FAS 157; ASC 820 (search for similar items in EconPapers)
JEL-codes: G21 M41 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11142-013-9242-y Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:reaccs:v:18:y:2013:i:3:d:10.1007_s11142-013-9242-y

Ordering information: This journal article can be ordered from
http://www.springer.com/accounting/journal/11142

DOI: 10.1007/s11142-013-9242-y

Access Statistics for this article

Review of Accounting Studies is currently edited by Paul Fischer

More articles in Review of Accounting Studies from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().