The Routledge Companion to Fair Value in Accounting (Routledge Companions in Business, Management and Marketing)

The concept of "fair value" marked a major departure from traditional cost accounting. In theory, under this approach a balance sheet that better reflects the current value of assets and liabilities. Critics of fair value argue that it is less useful over longer time frames and prone to distortion by market inefficiencies resulting in procyclicality in the financial system by exacerbating market swings. Comprising contributions from a unique mixture of academics, standard setters and practitioners, and edited by internationally recognized experts, this book, on a controversial and intensely debated topic, is a comprehensive reference source which: examines the use of fair value in international financial reporting standards and the US standard SFAS 157 Fair Value Measurement, setting out the case for and against looks at fair value from a number of different theoretical and practical perspectives, including a critical review of the merits and arguments against the use of fair value accounting explores fair value accounting in practice, involvement in the Great Financial Crisis, implications for managerial reporting discretion, compensation and investment This volume is an indispensable reference that is deserving of a place on the bookshelves of both libraries and all those working in, studying, or researching the areas of international accounting, financial accounting and reporting. Cover 1 Half Title 4 Title Page 6 Copyright Page 7 Contents 8 Contributors 11 Preface 17 Prologue: A reflection 20 1 Does the usage of fair values increase systemic risks? 22 PART I: Standards and conceptual issues 42 2 Fair value and the Conceptual Framework 44 3 Fair value accounting: a standard-setting perspective 60 4 Have the standard-setters gone too far, or not far enough, with fair value accounting? 75 5 Shareholder value, financialization and accounting regulation: making sense of fair value adoption in the European Union 92 PART II: Fair value, risk and financial crisis 108 6 Measuring fair value when markets malfunction: evidence from the financial crisis 110 7 Fair value accounting in financial institutions 125 8 Bank risk management – and fair value accounting 155 9 The use of fair value accounting in risk management in non-financial firms 174 PART III: Development 198 10 The history of the fair value term and its measurements 200 11 The ‘fairness’ of fair value accounting: marking-to-market, marking-to-model and financial reporting management 218 12 let the fox guard the henhouse: how relaxing the three-level fair value hierarchy increases the reliability of fair value estimates 233 PART IV: Specific topics 248 13 Fair value accounting: a manager’s perspective 250 14 Tax-related implications of fair value accounting 272 15 Fair value accounting and executive compensation 293 16 Fair value and the formation of financial market prices through ignorance and hazard 307 17 Fair value accounting: China experience 315 18 Fair value accounting and family firms 331 Index 350 This comprehensive edited book covers the contemporary theory and practice of fair value in accounting, providing advanced students and researchers with expert analysis of every facet of the field. Professionals in accounting will also find this incredible useful in considering new ways or working.