Fair value complexity and financial statement comparability

Hyejin Ahn

Asia-Pacific Journal of Accounting & Economics, 2022, vol. 29, issue 5, 1247-1266

Abstract: This study examines whether fair value accounting and its complexity influence financial statement comparability. Using quarterly US bank holding company data from 2008 to 2014, I find that the proportion of assets and liabilities that are fair valued is negatively associated with financial statement comparability and that this negative relation appears to be driven by the less v erifiable (lower-level) fair value estimates. Under the three-level hierarchy of SFAS 157, the financial statements of a bank become less comparable with those of other banks as the complexity of its fair value estimates increases. Overall, these results indicate that fair value complexity has a negative influence on comparability.

Date: 2022
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DOI: 10.1080/16081625.2021.1947861

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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