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Value relevance of fair values in different investor protection environments

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  • Jimi Siekkinen

Abstract

This paper examines whether the value relevance of fair values varies across investor protection environments. By analyzing financial firms from 34 countries this study finds evidence that fair values, irrespective of the level in the fair value hierarchy, are value relevant in countries with a strong or medium investor protection environment. In a weak investor protection environment, only market prices (level 1) are relevant to investors. In addition, the results indicate that the difference in value relevance between market prices (level 1) and fair value estimates (level 3) decreases with the quality of investor protection.

Suggested Citation

  • Jimi Siekkinen, 2016. "Value relevance of fair values in different investor protection environments," Accounting Forum, Taylor & Francis Journals, vol. 40(1), pages 1-15, March.
    • Handle: RePEc:taf:accfor:v:40:y:2016:i:1:p:1-15
    DOI: 10.1016/j.accfor.2015.11.001
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    Cited by:

    1. Esraa Esam Alharasis & Ahmad Saleem Tarawneh & Maha Shehadeh & Hossam Haddad & Ahmad Marei & Elina F. Hasan, 2022. "Reimbursement Costs of Auditing Financial Assets Measured by Fair Value Model in Jordanian Financial Firms’ Annual Reports," Sustainability, MDPI, vol. 14(17), pages 1-21, August.
    2. Hsu, Yu-Lin & Tang, Leilei, 2022. "Effects of investor sentiment and country governance on unexpected conditional volatility during the COVID-19 pandemic: Evidence from global stock markets," International Review of Financial Analysis, Elsevier, vol. 82(C).
    3. Sushma Vishnani & Nityanand Deva & Dheeraj Misra, 2024. "Value Relevance of Comprehensive Income reported as per IFRS-converged Indian Accounting Standards," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 31(3), pages 453-472, September.
    4. Himanshu & Jatinder P. Singh & Ashwani Kumar, 2020. "Prioritizing and Establishing Cause and Effect Relationships Among Financial Reporting Quality Metrics," Vision, , vol. 24(3), pages 330-344, September.
    5. Alshehabi, Ahmad & Georgiou, George & Ala, Alessandro S., 2021. "Country-specific drivers of the value relevance of goodwill impairment losses," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 43(C).
    6. Liao, Lin & Yao, Daifei (Troy) & Kang, Helen & Morris, Richard D., 2020. "The impact of legal efficacy on value relevance of the three-level fair value measurement hierarchy," Pacific-Basin Finance Journal, Elsevier, vol. 59(C).
    7. Alessandro Mechelli & Riccardo Cimini, 2021. "The effect of corporate governance and investor protection environments on the value relevance of new accounting standards: the case of IFRS 9 and IAS 39," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(4), pages 1241-1266, December.
    8. Ozili, Peterson K, 2021. "Financial reporting under economic policy uncertainty," MPRA Paper 105089, University Library of Munich, Germany.
    9. Sikalidis, Alexandros & Bozos, Konstantinos & Voulgaris, Georgios, 2023. "Asymmetric effects of fair value adjustments on dividend policy," International Review of Financial Analysis, Elsevier, vol. 90(C).
    10. Fernando García Martínez & Juan Domínguez Jiménez & Ricardo Queralt Sánchez de las Matas, 2024. "Reevaluating Bank Price-to-Book Ratios: An In-Depth Analysis of Equity Components across Economic Cycles," JRFM, MDPI, vol. 17(8), pages 1-21, August.

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