M.Comm. (International Accounting) / The study investigates the potential effect of applying a fair value model after the grant date to employee share options. The research assesses the appropriateness of the requirements of IFRS2 Share-Based Payment transactions with a specific focus on equity-settled Employee Share Options. The researcher has calculated the percentage movements or changes of fair value between each financial year including the overall percentage change. The study was mainly triggered by the IFRS2 Share-Based Payment rules and various arguments from different authors challenging the appropriateness of IFRS2 Share-Based Payment on employee share options (ESOs) transactions in capturing the full economic value transferred to the option holder at exercise date when applying a grant date accounting model. The study provides insights into whether a grant date accounting model is appropriate in measuring ESOs and capturing the full economic value transferred to the option holder. The application of a static fair value model in measuring the value of ESOs has the potential for both positive and negative effects on the compensation cost recognised in the financial statements over the vesting period. After analysing the descriptive financial data on fair value per option over the six year period included in the sample selection, a conclusion was reached that, IASB should consider to true-up or make a restatement of the opening balance of the fair value reserves account in order to minimise the potential permanent error in equity accounts and to minimise the potential effect of understating or overstating the compensation cost. The IASB should further consider the proper classification of equity instruments issued to employee ESOs which comply with other financial instrument accounting standards such as the IAS32 – Financial Instruments: Presentation, and IFRS9 Financial Instruments. This will ensure that transactions viewed as economic equivalents of each other are treated in the same way from an accounting perspective, and the correct measurement basis of ESOs may be achieved.

This thesis presents new empirical evidence on three important aspects of financial reporting by banks. The thesis consists of an introductory chapter that explains how the three issues are related to each other, three empirical chapters and a final summary chapter. The first empirical chapter studies the effects of accounting conservatism on the pricing of syndicated bank loans. I provide evidence that banks more timely in loss recognition charge higher spreads for the same loan provision. I go on to consider what happens to this relationship during the financial crisis. During the crisis, banks more timely in loss recognition increase their spreads to a lesser extent than banks less timely in loss recognition. The policy implication is that banks more timely in loss recognition exhibit more prudent and less pro-cyclical debt pricing behaviour. The second empirical chapter examines the relationship between the value relevance of fair value gains and losses and bank risk in an international bank sample. One possibility is that, as risk increases, the scope for subjectivity in fair value estimates increases thereby potentially rendering the numbers less useful. However another possibility is that the relevance of faithfully reported fair value gains and losses increases as risk increases. The study provides evidence that the value relevance of fair value gains and losses is positively associated with bank risk prior to the crisis. During the crisis there is also evidence of a similar positive relationship, but it is not possible to draw firm conclusions for reasons discussed in the chapter. My research also shows that the fair value gains and losses of banks that elect to use the fair value option for assets that could have been accounted for using amortized costs are more value relevant and persistent. This study provides information to policy makers on the situations when fair values are most useful to investors. The third empirical chapter examines if the market rationally prices the loan loss provisions, and the reported fair value gains and losses of US banks. The chapter models the discretionary components of loan loss provisions and fair value gains and losses, and tests if the discretionary components are priced differently from their non-discretionary counterparts. The results provide little evidence that the market misprices operating cash flows, non-discretionary loan loss provisions, or fair value gains and losses (discretionary or otherwise). However there is evidence of significant mispricing of discretionary loan loss provisions. The lack of evidence on the mispricing of fair value gains and losses is consistent with the finding on the value relevance of fair value gains and losses in the second empirical chapter.

Esta tese é motivada pelo recente processo de convergência contábil ao International Financial Reporting Standard - IFRS que, dentre outras inovações, adota fair value como base para mensuração, o que afeta a determinação do lucro contábil das entidades e, consequentemente, a distribuição de resultados. Nesse contexto, uma importante questão deve ser respondida: o fair value possui disponibilidade econômica? O trabalho discute o fair value como um elemento contábil responsável por mensurar e reconhecer as expectativas em relação a ativos e passivos, ou seja, antecipar o potencial de conversão em caixa (i.e., no caso de ativo). Para que seja possível determinar se o fair value possui disponibilidade econômica, o trabalho propõe um conceito. A disponibilidade econômica é o potencial que determinada expectativa possui de conversão em caixa, tendo em vista a presença reduzida de assimetria informacional entre as partes supostamente envolvidas na negociação, considerando a existência de ambiente de liquidez seguro e transparência na precificação. Nesse contexto, tendo em vista a existência de diferentes modalidades de fair value de acordo com os preceitos do IFRS, o estudo determina que os principais fatores para que se possa concluir sobre a disponibilidade econômica do fair value são: (a) expectativa de efeitos futuros, (b) presença reduzida de assimetria informacional, (c) ambiente de liquidez confiável e (d) transparência na precificação. O estudo conclui que há modalidades de fair value que possuem disponibilidade econômica, tal como o fair value atrelado a ativos financeiros com alta liquidez no mercado e com reduzida assimetria informacional para determinação de seu preço, mensurados com informações de Nível 1. O padrão IFRS permite que a disponibilidade econômica esteja mais nítida nos elementos contábeis. Devido ao fato de que a existência de mecanismos eficientes de negociação de ativos e passivos é o fator determinante mais dependente de externalidades, a afirmação mais ampla de que o fair value possui disponibilidade econômica possui relação com o contexto econômico, político e até mesmo o social. Muito embora possa se concluir sobre a disponibilidade econômica do fair value, a conclusão sobre sua tributação tangencia aspectos relativos à segurança jurídica e à capacidade contributiva. / This thesis is inspired by the Brazilian accounting convergence to International Financial Reporting Standards (IFRS), which among other inovations adopts fair value as a basis for accounting measurement, which affects the determination of the accounting profit of entities and, consequently, the distribution of results. In this context, there is an important question to be addressed: Is fair value available economically? This work considers fair value as an accounting element responsible for measuring and recognizing market expectations, that is, foreseeing the potential of conversion into cash (i.e. in the case of an asset). In order to determine if fair value is economically available, this paper proposes a concept of economic availability. Economic availability is the potential that a certain expectation has of conversion into cash, given the reduced presence of informational asymmetry between the parties supposedly involved in the transaction, considering the existence of a secure liquidity environment and safe trading conditions. In this context, considering the existence of different modalities of fair value according to the precepts of IFRS, this study ascertains that the main determining factors necessary to draw conclusions on the economic availability of fair value are: (a) expectation of future events, (b) reduced presence of informational asymmetry, (c) a reliable liquidity environment and (d) transparency in pricing. Thus the conclusion is that there are fair value modalities that have economic availability, such as fair value linked to financial assets as high liquidity in the market and with reduced informational asymmetry in determining their price, mensured based on Level 1 of information. The IFRS standard allows economic availability to be more sharply defined in accounting elements. Due to the existence of efficient mechanisms to negotiate assets and liabilities is factor that most depends on externalities, the broader assertion that fair value has economic availability depends on the economic, political and even social context. Although conclusions may be drawn on the economic availability of fair value, judgments on its taxation concern aspects related to legal certainty and the ability to pay.

<p>Research Question/ Purpose: Due to the increasing importance of international financial markets the significance of IAS 39 rises enormously. IAS39 deals with the measurement and recognition of financial instruments. One major aim is the valuation of the instrument at fair value. Therefore, the purpose of this paper is the examination of the major characteristics of the Fair Value Option (FVO) of IAS 39 and its affect on financial institutions.</p><p>Design/Methodology/Approach: An interpretative research philosophy is chosen in order to write the thesis. Therefore, the annual business reports of four major European banking institutions Dresdner Bank AG (Germany), Royal Bank of Scotland Group (Scotland), Nordea (Scandinavia), Crédit Mutuel (France) are examined. The gathered information does not have a statistical value, meaning that it cannot be used in order to develop a general conclusion</p><p>Findings: The analysis of the empirical findings and the amended FVO exhibits that banks tends to implement the FVO and FVA instead of applying Historical Cost Accounting. In addition a coherency is drawn between the major results of the empirical study, namely the importance of Fair Value Accounting (FVA).</p><p>Conclusion: The conclusion can be drawn, that the FVO presents a milestone towards FVA but that the development is still in process. The FVO supports the reduction of accounting mismatches and facilitates the valuation of embedded derivatives. Furthermore, FVA increases the comparability and transparency of financial statements.</p><p>Research Limitations: Due to the limitation of time, only a small number of banking institutions can be analyzed. A second limitation is that the banks have to adapt IAS and IFRS as their accounting standards.</p><p>Originality /Value: .The aim of this paper is not to generalize but to prove with the support of a small sample the effects of the FVO on the four selected financial institutions. On the basis of the literature review and the practical analysis the conclusion can be drawn, that in case of the analyzed institutions the FVO presents a step towards FVA.</p>

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Europa-Universiẗat Viadrina, Diss.--Frankfurt (Oder), 2006.

Research Question/ Purpose: Due to the increasing importance of international financial markets the significance of IAS 39 rises enormously. IAS39 deals with the measurement and recognition of financial instruments. One major aim is the valuation of the instrument at fair value. Therefore, the purpose of this paper is the examination of the major characteristics of the Fair Value Option (FVO) of IAS 39 and its affect on financial institutions. Design/Methodology/Approach: An interpretative research philosophy is chosen in order to write the thesis. Therefore, the annual business reports of four major European banking institutions Dresdner Bank AG (Germany), Royal Bank of Scotland Group (Scotland), Nordea (Scandinavia), Crédit Mutuel (France) are examined. The gathered information does not have a statistical value, meaning that it cannot be used in order to develop a general conclusion Findings: The analysis of the empirical findings and the amended FVO exhibits that banks tends to implement the FVO and FVA instead of applying Historical Cost Accounting. In addition a coherency is drawn between the major results of the empirical study, namely the importance of Fair Value Accounting (FVA). Conclusion: The conclusion can be drawn, that the FVO presents a milestone towards FVA but that the development is still in process. The FVO supports the reduction of accounting mismatches and facilitates the valuation of embedded derivatives. Furthermore, FVA increases the comparability and transparency of financial statements. Research Limitations: Due to the limitation of time, only a small number of banking institutions can be analyzed. A second limitation is that the banks have to adapt IAS and IFRS as their accounting standards. Originality /Value: .The aim of this paper is not to generalize but to prove with the support of a small sample the effects of the FVO on the four selected financial institutions. On the basis of the literature review and the practical analysis the conclusion can be drawn, that in case of the analyzed institutions the FVO presents a step towards FVA.

With the recent financial crisis that have happened and the global move towards fair value accounting financial institutions such as the IASB saw fit to increase the mandatory disclosure requirements by implementing IFRS 13 to regulated fair value accounting in IFRS. The implementation of IFRS 13 means that many of the old standards in regards to fair value will be replaced, for example investment properties reporting under IAS 40. Furthermore IFRS 13 redefines the classification system for assets and liabilities.   The purpose of this study is to investigate whether these changes have any influence on investment decisions. This has been done by adopting a qualitative abductive descripto-explanatory approach to our research, and our empirical data was gathered through semi-structured interviews with academics and audit professionals.   The analysis of our empirical data suggests that the implementation of IFRS 13 and its increased disclosure requirements have been useful to investor’s decision making. IFRS 13 accomplishes this through its increased clarity in financial reporting. However investors should be mindful whilst investing in companies utilizing Level 3 valuation techniques because they use estimates of unobservable inputs and because such estimates are hard to control they are prone to bias, error, and manipulation.

Universiẗat, Diss., 2005--Bochum.