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Reliability of Level Three Valuations and Credit Crisis

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  • Arber H. Hoti

    (University of Prishtina, Republic of Kosovo)

  • Elvira K. Hoti

    (University of Prishtina, Republic of Kosovo)

Abstract

This research paper evaluates the impact of level three valuations in accordance with FAS 157 and its impact on investors, auditors’ work, and valuation. The objective of this research is to demonstrate that the fair value measurements should not be suspended. The standards provide for measurement of fair value in all market conditions. Therefore, level 3 measurements or mark-tomodel is an answer for many issuers that are not sure how to measure their assets and liabilities at the fair value. The paper concludes that fair value measurement has not caused the current crisis and has no pro-cyclical effect and suggests several recommendations for policy makers and regulators

Suggested Citation

  • Arber H. Hoti & Elvira K. Hoti, 2012. "Reliability of Level Three Valuations and Credit Crisis," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 1(1), pages 5-13, March.
    • Handle: RePEc:dug:actaec:y:2012:i:1:p:5-13
    as

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    File URL: http://journals.univ-danubius.ro/index.php/oeconomica/article/view/1099/1076
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    References listed on IDEAS

    as
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    2. Benston, George J., 2008. "The shortcomings of fair-value accounting described in SFAS 157," Journal of Accounting and Public Policy, Elsevier, vol. 27(2), pages 101-114.
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    4. Guillaume Plantin & Haresh Sapra & Hyun Song Shin, 2008. "Marking‐to‐Market: Panacea or Pandora's Box?," Journal of Accounting Research, Wiley Blackwell, vol. 46(2), pages 435-460, May.
    5. Wayne Landsman, 2007. "Is fair value accounting information relevant and reliable? Evidence from capital market research," Accounting and Business Research, Taylor & Francis Journals, vol. 37(S1), pages 19-30.
    6. Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
    Full references (including those not matched with items on IDEAS)

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