Institution-specific value

Ken Peasnell
Additional contact information
Ken Peasnell: Lancaster University - Department of Accounting, Finance

No 210, BIS Working Papers from Bank for International Settlements

Abstract: The introduction of a new accounting standard for financial instruments, has raised a number of issues related to the application of fair value principles. This paper discusses some of these issues which are generally related to the fact that "fair values" are not always easily defined or readily available. It concludes that the application of fair value for financial liabilities might present fewer complications if it is matched by similar valuation principles for financial assets. The issue of measurement error is more complicated as it can be related to whether valuations refer to exit value, as postulated by the IASB, or deprival value, which is more closely related to firm-specific valuation. Measurement error is magnified in the income statement and so will be any biases from the application of historical accounting for derivatives. Despite any measurement issues, the problem of institution-specific dimensions of value that looms so large in the case of non-financial enterprises and makes the systematic application of fair value accounting fraud with difficulty there, would seem to be much more manageable for financial institutions because of their familiarity with risk measurement and management techniques for financial instruments.

Keywords: financial statements; institution-specific value; fair value; financial reporting (search for similar items in EconPapers)
JEL-codes: E58 G15 M41 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2006-08
New Economics Papers: this item is included in nep-acc, nep-his and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.bis.org/publ/work210.pdf Full PDF document (application/pdf)
http://www.bis.org/publ/work210.htm (text/html)

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:bis:biswps:210

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().