IDEAS home Printed from https://ideas.repec.org/a/prg/jnlcfu/v2016y2016i1id467p49-65.html
   My bibliography  Save this article

Fair Value: Differences in approach to the value under financial accounting and asset valuation
[Fair Value: Rozdíly v pojetí hodnoty v rámci finančního účetnictví a oceňování aktiv]

Author

Listed:
  • Roman Čibera

Abstract

For the purpose of transparency and repeatability, a standardization of processes in financial accounting and assets valuation is a long-term trend. The process of standardization within both of these fields takes place relatively separately, which causes some problems. One of possible problems is that within different standards the same terms are defined in different ways. Just one such an example is more deeply examined in this text. The difference of the definition of fair value within IFRS and IVS being used in practice can lead to a lot of misunderstandings. This text compares the approach to the fair value within both of the standards, points out impacts of the difference during practical use of standards. Furthermore there is an examination based on analysis of 2014 annual financial reports of sample of 24 companies listed on the Prague Stock Exchange regarding extent and quality of application of the standard IFRS 13 aiming to find out attitude of users of IFRS 13 to the definition framework of fair value. The examination leads to the result that application of IFRS 13 by these companies doesn't correspond to the requirements of the standard.

Suggested Citation

  • Roman Čibera, 2016. "Fair Value: Differences in approach to the value under financial accounting and asset valuation [Fair Value: Rozdíly v pojetí hodnoty v rámci finančního účetnictví a oceňování aktiv]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2016(1), pages 49-65.
    • Handle: RePEc:prg:jnlcfu:v:2016:y:2016:i:1:id:467:p:49-65
    DOI: 10.18267/j.cfuc.467
    as

    Download full text from publisher

    File URL: http://cfuc.vse.cz/doi/10.18267/j.cfuc.467.html
    Download Restriction: free of charge
    File URL: http://cfuc.vse.cz/doi/10.18267/j.cfuc.467.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.18267/j.cfuc.467?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. John A. Enahoro & Jumoke Jayeoba, 2013. "Value Measurement and Disclosures in Fair Value Accounting," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(9), pages 1170-1179, September.
    2. Edward J. Riedl & George Serafeim, 2011. "Information Risk and Fair Values: An Examination of Equity Betas," Journal of Accounting Research, Wiley Blackwell, vol. 49(4), pages 1083-1122, September.
    3. Andrea Menini & Michel Magnan, 2011. "Fair Value Accounting: Information Or Confusion For Financial Markets?," CIRANO Papers 2011n-10a, CIRANO.
    4. Mihai Ristea & Ionel Jianu, 2010. "Dynamics Of The Fair Value In Accounting," Analele Stiintifice ale Universitatii "Alexandru Ioan Cuza" din Iasi - Stiinte Economice (1954-2015), Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, vol. 2010, pages 69-83, july.
    5. Andrea Menini & Michel Magnan & Antonio Parbonetti, 2011. "Fair Value Accounting: Information or Confusion for Financial Markets?," CIRANO Working Papers 2011s-56, CIRANO.
    6. John A Enahoro & Jumoke Jayeoba, 2013. "Value Measurement and Disclosures in Fair Value Accounting," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(9), pages 1170-1179.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Emanuel Bagna & Giuseppe Di Martino & Davide Rossi, 2014. "An anatomy of the Level 3 fair-value hierarchy discount," DEM Working Papers Series 065, University of Pavia, Department of Economics and Management.
    2. Jan Dvořák, 2017. "How Do Czech Companies Report Fair Value Measurement Under IFRS 13?," European Financial and Accounting Journal, Prague University of Economics and Business, vol. 2017(3), pages 117-127.
    3. Marcel Boyer, 2017. "Méthodes avancées d’évaluation d’investissements / Advanced Methods of Investment Evaluation - Tome 2," CIRANO Monographs, CIRANO, number 2017mo-04, January.
    4. Chue, Timothy K. & Gul, Ferdinand A. & Mian, G. Mujtaba, 2019. "Aggregate investor sentiment and stock return synchronicity," Journal of Banking & Finance, Elsevier, vol. 108(C).
    5. Steve Fortin & Ahmad Hammami & Michel Magnan, 2021. "Re‐exploring Fair Value Accounting and Value Relevance: An Examination of Underlying Securities," Abacus, Accounting Foundation, University of Sydney, vol. 57(2), pages 220-250, June.
    6. Hong, Philip K. & Hwang, Seokyoun, 2018. "Fair value disclosure of pension plan assets and audit fees," Advances in accounting, Elsevier, vol. 41(C), pages 88-96.
    7. Jones, Jeffrey S. & Lee, Wayne Y. & Yeager, Timothy J., 2013. "Valuation and systemic risk consequences of bank opacity," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 693-706.
    8. Terry Shevlin, 2013. "Some personal observations on the debate on the link between financial reporting quality and the cost of equity capital," Australian Journal of Management, Australian School of Business, vol. 38(3), pages 447-473, December.
    9. Takuya Iwasaki & Shota Otomasa & Atsushi Shiiba & Akinobu Shuto, 2012. "The role of accounting conservatism in executive compensation contracts (Forthcoming in Journal of Business Finance and Accounting)," CARF F-Series CARF-F-370, Center for Advanced Research in Finance, Faculty of Economics, The University of Tokyo, revised Jul 2018.
    10. Hsu, Audrey Wen-hsin & Pourjalali, Hamid & Song, Yi-Ju, 2018. "Fair value disclosures and crash risk," Journal of Contemporary Accounting and Economics, Elsevier, vol. 14(3), pages 358-372.
    11. Renee Weiss & John Shon, 2017. "Information Asymmetry and Voluntary SFAS 157 Fair Value Disclosures by Bank Holding Companies During the 2007 Financial Crisis," Accounting Perspectives, John Wiley & Sons, vol. 16(3), pages 169-203, September.
    12. Ester Chen & Ilanit Gavious & Nadav Steinberg, 2019. "Dividends from unrealized earnings and default risk," Review of Accounting Studies, Springer, vol. 24(2), pages 491-535, June.
    13. Igor Goncharov & Sander Triest, 2014. "Unintended Consequences of Changing Accounting Standards: The Case of Fair Value Accounting and Mandatory Dividends," Abacus, Accounting Foundation, University of Sydney, vol. 50(3), pages 341-367, September.
    14. Daniel Ferreira & David Kershaw & Tom Kirchmaier & Edmund Schuster, "undated". "Shareholder Empowerment and Bank Bailouts," FMG Discussion Papers dp714, Financial Markets Group.
    15. Elbannan, Mohamed A. & Elbannan, Mona A., 2015. "Information content of SFAS 157 fair value reporting," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 25(C), pages 31-45.
    16. Derrick W. H. Fung & David Jou & Ai Ju Shao & Jason J. H. Yeh, 2021. "The informativeness of embedded value reporting to stock price," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(4), pages 5341-5376, December.
    17. Renee Weiss & John Shon, 2015. "Voluntary Fair Value Disclosures By Bank Holding Companies: The Role Of Sec Dear Cfo Letters," Accounting & Taxation, The Institute for Business and Finance Research, vol. 7(1), pages 21-37.
    18. Ulf Mohrmann & Jan Riepe, 2019. "The link between the share of banks’ Level 3 assets and their default risk and default costs," Review of Quantitative Finance and Accounting, Springer, vol. 52(4), pages 1163-1189, May.
    19. Tamás Szücs & József Ulbert, 2017. "Role and Measurement of Fair Valuation in the Hungarian Credit Institution Sector," Financial and Economic Review, Magyar Nemzeti Bank (Central Bank of Hungary), vol. 16(3), pages 51-73.
    20. Assaf Bar‐Hod & Ester Chen & Ilanit Gavious, 2021. "The economic consequences of fair value disclosures: a manifestation of the buried facts doctrine," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1363-1413, April.

    More about this item

    Keywords

    Fair value; Financial accounting; Assets valuation; Standards of value; Standardization; Market value; Finanční účetnictví; Oceňování aktiv; Standardy hodnoty; Standardizace; Tržní hodnota;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlcfu:v:2016:y:2016:i:1:id:467:p:49-65. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Stanislav Vojir (email available below). General contact details of provider: https://edirc.repec.org/data/uevsecz.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.