Fair value in accounting and financial crisis - five years after

摘要

The European Commission has recently endorsed IFRS 13 on fair value measurement and is considering the endorsement of IFRS 9, which extends the use of fair value for financial instruments. The recent financial crisis has led to a vigorous debate about the pros and cons of fair-value accounting. This debate presents a major challenge for fair-value accounting going forward and standard setters' push to extend fair-value accounting into other areas. In this paper, we principally highlight four important issues as an attempt to make sense of the debate. First, much of the controversy results from confusion about what is new and different about fair-value accounting. Second, while there are legitimate concerns about marking to market or pure fair-value accounting in times of financial crisis, it is less clear that these problems apply to fair-value accounting as stipulated by the accounting standards, be it IFRS or US GAAP. Third, historical cost accounting is unlikely to be the remedy. There are a number of concerns about historical cost accounting as well and these problems could be larger than those with fair-value accounting. Fourth, although it is difficult to fault the fair-value standards per se, implementation issues are a potential concern, especially with respect to litigation. Finally, we identify several avenues for future research.