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.

In recent times, the significance of fair value in financial reporting is gaining momentum and current debates are moving in the trend of full fair value reporting. Small and medium-sized entities are not let off in this instance. The move to new reporting standards results in numerous challenges for diverse interest groups such as auditors, preparers and regulators. The main objective of the study was to establish the fair value implementation challenges facing SMEs in the agricultural sector in Ghana. This study established that, in Ghana, commodity markets do not exist and that farmers do not have access to market information. The study also established that there is high IFRS implementation cost, inadequate training and education for preparers of financial statements and academic education not focusing on agricultural accounting. In light of these challenges, the study recommends improving capacity building through user training and education and establishment of commodity markets. / Financial Accounting / M. Phil. (Accounting Sciences)

Using a sample of 51 banking organizations, I examine the effect of the Statement of Financial Accounting Standard 133 on the belief heterogeneity of market participants and how this heterogeneity affects abnormal trading volume surrounding earnings announcements. SFAS 133 is the first standard to require that all derivatives be recognized at fair-value and that the fluctuations in derivative fair-values be reported in either net income or other comprehensive income. The behavior of derivative instruments and the fair-valuation and treatment prescribed by SFAS 133 are complex. Due to the underlying complexity of both derivatives and the accounting treatment prescribed by the SFAS 133 standard, I expect that investors may have differing interpretations of the newly provided information. My hypothesis is that the income effects arising from the fair-value accounting for derivatives (SFAS 133) are associated with an increase in differing beliefs among individuals. I find that the income effects of SFAS 133 are significantly and positively related to belief heterogeneity among investors. The net income and other comprehensive income effects of SFAS 133 are significantly and positively related to increasing levels of abnormal trading volume surrounding earnings announcements. Additionally, levels of SFAS 133 net income is positively and significantly associated with three measures of belief heterogeneity derived from analysts’ forecasts. In an extended analysis I model the SFAS 133 income effects on abnormal volume using the three belief heterogeneity measures as the conduit. I find support for two of the three heterogeneity measures acting as a conduit for the effect of the SFAS 133 related income measures on abnormal volume. The results of this study indicate that, while the recognized fair-value of derivatives is value relevant to equity prices (Ahmed, Kilic, & Lobo, 2006), the income effects of the same financial standard causes heterogeneity in beliefs about the firm. This suggests that, at least in the case of derivative fair-values, there exists a trade-off between value relevance and the strength of consensus surrounding beliefs in the market.

<p>Purpose: The main purpose of the thesis is to examine the consequences of applying IAS40 on the Swedish real estate companies’ annual reports. How does its application affect the companies’ stockholders’ capital and how do the companies solve the problems that occur due to the application of this standard.</p><p>Method: The authors use both the qualitative and quantitative approaches to process the thesis. The primary data comprises of hard data in form of annual reports and the secondary data consists of the soft data as direct interviews and email interviews.</p><p>Theory: There aren’t any theories on the subject. The authors base their work on the laws and regulations about the subject.</p><p>Empirical base: Hard data from annual reports is represented in tables and make up the primary data of the thesis. The secondary data consists of the summary of the interviews.</p><p>Conclusions: The authors have come to the conclusion that the application of the IAS 40 does not imply any dramatic consequence for the business accounting and that the enterprises do not feel any difficulty in applying it. All of the companies have chosen to report in fair value. Certainly, annual reporting has become more expensive but the annual reporting in return has become manageable and gives a better picture of the company. There aren’t any bigger drawbacks with the standard but reporting has become theoretically extensive – that means that the reports contain information that are not necessary.</p>

Purpose: The main purpose of the thesis is to examine the consequences of applying IAS40 on the Swedish real estate companies’ annual reports. How does its application affect the companies’ stockholders’ capital and how do the companies solve the problems that occur due to the application of this standard. Method: The authors use both the qualitative and quantitative approaches to process the thesis. The primary data comprises of hard data in form of annual reports and the secondary data consists of the soft data as direct interviews and email interviews. Theory: There aren’t any theories on the subject. The authors base their work on the laws and regulations about the subject. Empirical base: Hard data from annual reports is represented in tables and make up the primary data of the thesis. The secondary data consists of the summary of the interviews. Conclusions: The authors have come to the conclusion that the application of the IAS 40 does not imply any dramatic consequence for the business accounting and that the enterprises do not feel any difficulty in applying it. All of the companies have chosen to report in fair value. Certainly, annual reporting has become more expensive but the annual reporting in return has become manageable and gives a better picture of the company. There aren’t any bigger drawbacks with the standard but reporting has become theoretically extensive – that means that the reports contain information that are not necessary.

Abstract Problem: In today’s business environment, rising demand in financial reporting and frequent changes in accounting frameworks lead to an increased focus on reliability in Fair Value Measurement (FVM) and disclosures. The frequent changes in accounting frameworks create a challenge for managers in measuring accounting estimates accurately and have been an exceedingly difficult task. The difficult task is that of the auditors. How would auditors endorse and ensure the reliability and relevance of financial statements? Also how could they evaluate the accuracy of the measurement of fair values as presented in the financial statements? (IFAC, 2011, ISA 540). Purpose: The purpose of this thesis is to explore the methods and approaches used by auditors while auditing fair values from practical perspectives. Method: A multiple case study with pure qualitative methods and an inductive approach has been adopted. The qualitative method used a semi-structured interview to collect data.  Result: The result shows that by understanding the challenges and following the phases of auditing, auditors can maintain the quality of financial reporting. Four key audit phases are relevant to audit FVM. These are: understanding the Client-Business environment, Engagement, Internal Control, and Planning phases of auditing. Furthermore, the results revealed key challenges of auditing FVM and disclosures. These challenges are information insufficiency in the market (reliability), competence, auditors’ lack of fair value audit exposure, and the manager's leadership role and style. Moreover, as previous studies on FV have primarily relied on synthesis of academic literature, the thesis contributes knowledge to academia by using an empirical approach.

Over the Past two and a half years banks have failed at the fastest pace since the Great Depression. These rapidly mounting bank failures have rekindled a debate surrounding the use of fair value accounting, with many arguing that fair value has exacerbated the severity of the recent financial crisis through asset devaluation and the forced sale of assets in an effort to meet capital requirements. This paper seeks to test if an entity’s exposure to fair value which includes assets available-for-sale, trading assets, and loans held-for-sale as a percent of total assets increases the probability of bank failure through testing different prediction models of bank failure that use ratios generated from publicly available Call Report data. Two models are generated from these ratios, one to determine the significance of an entity’s fair value exposure in predicting risk of failure, and the other to determine if a better model can be generated in the absence of the Fair Value Exposure/Total Assets ratio. The first model shows that Fair Value Exposure/Total Assets is a statistically significant ratio, and that the model employing Fair Value Exposure/Total Assets has greater bank failure predictive power than the second model that excludes this ratio. Contrary to expectations, the study determines that greater fair value exposure actually decreases a bank’s risk of failure, rather than increases it. A number of possibilities as to why this may be are presented in the conclusion of the paper.

During the financial crisis, many assets became illiquid and ceased trading on the open market, thus classifying them as level three assets. This study attempts to determine whether fair value asset disclosures, especially level three assets, were viewed by the market as valued correctly, given the amount of subjectivity involved. This paper will discuss prior literature on the topics of fair value accounting, various earnings quality measures, and corporate governance impact on fair value disclosures. Using models similar to prior papers, many of the coefficients of interest proved insignificant. However, the models improved when examining only the least credible firms.

Thesis (doctoral)--Universität St. Gallen, 2002.

I examine the information content of unrealized cash flow hedge gains/losses for future profitability and stock returns. An unrealized gain on a cash flow hedge suggests that the price of the underlying hedged item (i.e. commodity price, foreign currency exchange rate or interest rate) moved in a direction that negatively affects the firm. Based on this inverse relation, I find that unrealized cash flow hedge gains/losses are negatively associated with future gross margin. This association is weaker for firms that have the ability to pass input price changes through to customers. Finally, I find that investors do not immediately price the information conveyed by cash flow hedges. Instead, investors appear surprised by future realizations of gross margin, consistent with the view that a lack of transparent disclosure on future hedged transactions leads to a delay in pricing. These results may inform current policy decisions of both the FASB and SEC.