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Fair Value Accounting: A Controversial but Promising System

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  • Fawzi A. Al Sawalqa

Abstract

There is almost a worldwide consensus that the usage of fair value accounting is not an easy task due to some limitations that affect its reliability. Prior studies in fair value accounting have unanimously agreed on the existence of clear defects in measuring fair value especially under level 3 of fair value hierarchy where active market does not easily exist for the asset or liability. The current study offers some creative suggestions that standard-setters (e.g. FASB and IASB), regulators, practitioners and academics should globally adopt to ensure a brighter future for fair value accounting.

Suggested Citation

  • Fawzi A. Al Sawalqa, 2016. "Fair Value Accounting: A Controversial but Promising System," Accounting and Finance Research, Sciedu Press, vol. 5(1), pages 1-88, February.
    • Handle: RePEc:jfr:afr111:v:5:y:2016:i:1:p:88
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    References listed on IDEAS

    as
    1. Joshua Ronen, 2008. "To Fair Value or Not to Fair Value: A Broader Perspective," Abacus, Accounting Foundation, University of Sydney, vol. 44(2), pages 181-208, June.
    2. Vera Palea & Renato Maino, 2013. "Private Equity Fair Value Measurement: A Critical Perspective on IFRS 13," Australian Accounting Review, CPA Australia, vol. 23(3), pages 264-278, September.
    3. Michel Magnan, 2009. "Fair Value Accounting and the Financial Crisis: Messenger or Contributor?," CIRANO Working Papers 2009s-27, CIRANO.
    4. Michel Magnan & Daniel Thornton, 2009. "Fair Value Accounting," CIRANO Working Papers 2009s-47, CIRANO.
    5. Michael Power, 2010. "Fair value accounting, financial economics and the transformation of reliability," Accounting and Business Research, Taylor & Francis Journals, vol. 40(3), pages 197-210.
    6. J. Alex Milburn, 2008. "The Relationship between Fair Value, Market Value, and Efficient Markets," Accounting Perspectives, John Wiley & Sons, vol. 7(4), pages 293-316, November.
    7. Christian Laux & Christian Leuz, 2010. "Did Fair-Value Accounting Contribute to the Financial Crisis?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 93-118, Winter.
    8. Michel L. Magnan, 2009. "Fair Value Accounting and the Financial Crisis: Messenger or Contributor?," Accounting Perspectives, John Wiley & Sons, vol. 8(3), pages 189-213, August.
    9. 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.
    10. Mary Barth & Wayne Landsman, 2010. "How did Financial Reporting Contribute to the Financial Crisis?," European Accounting Review, Taylor & Francis Journals, vol. 19(3), pages 399-423.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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