Fair Value Accounting for Financial Assets. A Value Relevance Study in an Emerging Economy

Kód výsledku v IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F29142890%3A_____%2F20%3A00038725" target="_blank" >RIV/29142890:_____/20:00038725 - isvavai.cz</a>

Výsledek na webu

<a href="https://editorial.upce.cz/1804-8048/28/2/1065" target="_blank" >https://editorial.upce.cz/1804-8048/28/2/1065</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.46585/SP28021065" target="_blank" >10.46585/SP28021065</a>

Jazyk výsledku

angličtina

Název v původním jazyce

Fair Value Accounting for Financial Assets. A Value Relevance Study in an Emerging Economy

Popis výsledku v původním jazyce

There are few areas in accounting which generate debates as intense as measurement, and in particular fair values, because they directly impact the figures reported, as well as their credibility and relevance. The main argument in favour of fair values is that these are providing relevant information to the market participants. The main objective of our paper is to analyze if fair values reported by Romanian companies in their financial statements (more precisely in the case of financial assets) are value relevant. We therefore contribute to the little developed body of literature on the value relevance of fair value in emerging markets. We employ a model which is similar to that proposed by Barth (1994), based on the relation between the bank’s market value and its net assets, separated into financial assets and net asset before (excluding) financial assets. Furthermore, we also analyze whether value relevance of fair value accounting for financial assets varies with the three levels of the fair value hierarchy. Consistent with Barth (1994), we find that financial reporting at fair value of the financial assets has a greater explanatory power of the share prices compared to the historical cost reporting. Partially consistent with Song et al. (2010), we also document that financial assets reported at fair value within level 1 are value relevant, while financial assets of level 2 and level 3 are not value relevant.

Název v anglickém jazyce

Fair Value Accounting for Financial Assets. A Value Relevance Study in an Emerging Economy

Popis výsledku anglicky

There are few areas in accounting which generate debates as intense as measurement, and in particular fair values, because they directly impact the figures reported, as well as their credibility and relevance. The main argument in favour of fair values is that these are providing relevant information to the market participants. The main objective of our paper is to analyze if fair values reported by Romanian companies in their financial statements (more precisely in the case of financial assets) are value relevant. We therefore contribute to the little developed body of literature on the value relevance of fair value in emerging markets. We employ a model which is similar to that proposed by Barth (1994), based on the relation between the bank’s market value and its net assets, separated into financial assets and net asset before (excluding) financial assets. Furthermore, we also analyze whether value relevance of fair value accounting for financial assets varies with the three levels of the fair value hierarchy. Consistent with Barth (1994), we find that financial reporting at fair value of the financial assets has a greater explanatory power of the share prices compared to the historical cost reporting. Partially consistent with Song et al. (2010), we also document that financial assets reported at fair value within level 1 are value relevant, while financial assets of level 2 and level 3 are not value relevant.

Druh

J_SC - Článek v periodiku v databázi SCOPUS

CEP obor

—

OECD FORD obor

50205 - Accounting

Projekt

—

Návaznosti

N - Vyzkumna aktivita podporovana z neverejnych zdroju

Rok uplatnění

2020

Kód důvěrnosti údajů

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Název periodika

Scientific Papers of the University of Pardubice, Series D: Faculty of Economics and Administration

ISSN

1804-8048

e-ISSN

—

Svazek periodika

28

Číslo periodika v rámci svazku

2

Stát vydavatele periodika

CZ - Česká republika

Počet stran výsledku

9

Strana od-do

1-9

Kód UT WoS článku

—

EID výsledku v databázi Scopus

2-s2.0-85091670152