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Does disaggregation of fair value information increase the value relevance of the fair value hierarchy?

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  • Lu, Hung-Yuan (Richard)
  • Mande, Vivek

Abstract

In response to pressures from Congress, the SEC and investors, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurement. ASU 2010-06 mandates that firms provide disaggregated fair value information by class of financial instruments under each level of the fair value hierarchy. Using financial statements of publicly traded banks for the first quarters of 2009 and 2010, this study examines whether providing class-level information increases the value relevance of the fair value hierarchy. In support of our hypothesis, we find that fair value relevance increases under ASU 2010-06.

Suggested Citation

  • Lu, Hung-Yuan (Richard) & Mande, Vivek, 2014. "Does disaggregation of fair value information increase the value relevance of the fair value hierarchy?," Research in Accounting Regulation, Elsevier, vol. 26(1), pages 90-97.
    • Handle: RePEc:eee:reacre:v:26:y:2014:i:1:p:90-97
    DOI: 10.1016/j.racreg.2014.02.009
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    References listed on IDEAS

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    1. Philip G. Berger & Rebecca Hann, 2003. "The Impact of SFAS No. 131 on Information and Monitoring," Journal of Accounting Research, Wiley Blackwell, vol. 41(2), pages 163-223, May.
    2. Eccher, Elizabeth A. & Ramesh, K. & Thiagarajan, S. Ramu, 1996. "Fair value disclosures by bank holding companies," Journal of Accounting and Economics, Elsevier, vol. 22(1-3), pages 79-117, October.
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    4. Hughes, Susan B. & Wood, Amy L. & Hodgdon, Christopher, 2011. "Bank response to SEC disclosure guidance issued during the 2007–2008 US financial crisis," Research in Accounting Regulation, Elsevier, vol. 23(2), pages 149-159.
    5. D. Eric Hirst & Lisa Koonce & Shankar Venkataraman, 2007. "How Disaggregation Enhances the Credibility of Management Earnings Forecasts," Journal of Accounting Research, Wiley Blackwell, vol. 45(4), pages 811-837, September.
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    Cited by:

    1. Qu, Xiaohui & Zhang, Guohua, 2015. "Value-relevance of Earnings and Book Value Over the Institutional Transition in China: The Suitability of Fair Value Accounting in This Emerging Market," The International Journal of Accounting, Elsevier, vol. 50(2), pages 195-223.
    2. Hasnah Shaari, 2024. "Value Relevance of Fair Value Measurement on Investment Property: Malaysian Evidence," GATR Journals afr234, Global Academy of Training and Research (GATR) Enterprise.
    3. Glasscock, Robson & Harless, David W. & Dorminey, Jack, 2017. "The curious case of Level 3 instruments," Research in Accounting Regulation, Elsevier, vol. 29(1), pages 52-68.
    4. Couch, Robert & Thibodeau, Nicole & Wu, Wei, 2017. "Are fair value options created equal? A study of SFAS 159 and earnings volatility," Advances in accounting, Elsevier, vol. 38(C), pages 15-29.

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