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The Economic Impact of SFAS NO. 157

Author

Listed:
  • Sak Bhamornsiri
  • Robert Guinn
  • Richard Schroeder

Abstract

Statement of Financial Accounting Standards No. 157, “Fair Value Measurements,” (SFAS 157) defines fair value, establishes a three tiered framework for measuring fair value and expands the required disclosures about fair value measurements. The objective of this study is to examine and evaluate the benefits of the information disclosed by SFAS 157. The results of our study indicated that a large majority of the inputs are observable in that 93.5% of the sample financial assets and 93.1% of the sample financial liabilities were measured by level 1 or 2 criteria. However, we found a mismatch between assets and liabilities subject to the three tiers of fair value measurements. The companies in our sample disclosed $18.8 trillion in total assets, with 51%, or $9.5 trillion reported at fair value. Whereas, sample company liabilities totaled $16.1 trillion with only $3.7 trillion or 23% reported at fair value. Copyright International Atlantic Economic Society 2010

Suggested Citation

  • Sak Bhamornsiri & Robert Guinn & Richard Schroeder, 2010. "The Economic Impact of SFAS NO. 157," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 16(1), pages 65-79, February.
    • Handle: RePEc:kap:iaecre:v:16:y:2010:i:1:p:65-79:10.1007/s11294-009-9242-7
    DOI: 10.1007/s11294-009-9242-7
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    Cited by:

    1. Hua-Wei Huang & Mai Dao & James Fornaro, 2016. "Corporate governance, SFAS 157 and cost of equity capital: evidence from US financial institutions," Review of Quantitative Finance and Accounting, Springer, vol. 46(1), pages 141-177, January.
    2. Hua-Wei Huang & Mai Dao & James M. Fornaro, 2016. "Corporate governance, SFAS 157 and cost of equity capital: evidence from US financial institutions," Review of Quantitative Finance and Accounting, Springer, vol. 46(1), pages 141-177, January.

    More about this item

    Keywords

    Economic impact; Fair value; SFAS 157; M41 Accounting;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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