Voluntary Fair Value Disclosures Beyond SFAS 157’s Three-level Estimates
Some firms voluntarily make disclosures about the controls and processes in place to ensure the reliability of fair value estimates. Consistent with these disclosures being driven by management’s concerns about the reliability of their SFAS 157 estimates, we find that firms with more opaque estimate...
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sg-smu-ink.soa_research-20552019-09-11T06:16:59Z Voluntary Fair Value Disclosures Beyond SFAS 157’s Three-level Estimates CHUNG, Sung Gon GOH, Beng Wee NG, Jeffrey OW YONG, Kevin Some firms voluntarily make disclosures about the controls and processes in place to ensure the reliability of fair value estimates. Consistent with these disclosures being driven by management’s concerns about the reliability of their SFAS 157 estimates, we find that firms with more opaque estimates are more likely to provide such disclosures. We then examine whether these disclosures increase the reliability of fair value estimates. We find that they are associated with higher market pricing and lower information risk for Level 3 estimates. Further analyses of the contents of the reliability disclosures reveal that the following are particularly important to investors: discussions about the external and independent pricing of fair value estimates as well as proper classification of the estimates according to the SFAS 157 hierarchy. Overall, our results suggest that the voluntary reliability disclosures that firms provide beyond SFAS 157’s three-level estimates help reduce investors’ uncertainty about more opaque fair value estimates. 2017-03-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/1056 info:doi/10.1007/s11142-016-9384-9 https://ink.library.smu.edu.sg/context/soa_research/article/2055/viewcontent/VoluntaryFairValueDisSFAS157_2016May_afv.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Fair value accounting SFAS 157 voluntary disclosure controls information risk Accounting Corporate Finance |
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Fair value accounting SFAS 157 voluntary disclosure controls information risk Accounting Corporate Finance CHUNG, Sung Gon GOH, Beng Wee NG, Jeffrey OW YONG, Kevin Voluntary Fair Value Disclosures Beyond SFAS 157’s Three-level Estimates |
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Some firms voluntarily make disclosures about the controls and processes in place to ensure the reliability of fair value estimates. Consistent with these disclosures being driven by management’s concerns about the reliability of their SFAS 157 estimates, we find that firms with more opaque estimates are more likely to provide such disclosures. We then examine whether these disclosures increase the reliability of fair value estimates. We find that they are associated with higher market pricing and lower information risk for Level 3 estimates. Further analyses of the contents of the reliability disclosures reveal that the following are particularly important to investors: discussions about the external and independent pricing of fair value estimates as well as proper classification of the estimates according to the SFAS 157 hierarchy. Overall, our results suggest that the voluntary reliability disclosures that firms provide beyond SFAS 157’s three-level estimates help reduce investors’ uncertainty about more opaque fair value estimates. |
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text |
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CHUNG, Sung Gon GOH, Beng Wee NG, Jeffrey OW YONG, Kevin |
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CHUNG, Sung Gon GOH, Beng Wee NG, Jeffrey OW YONG, Kevin |
author_sort |
CHUNG, Sung Gon |
title |
Voluntary Fair Value Disclosures Beyond SFAS 157’s Three-level Estimates |
title_short |
Voluntary Fair Value Disclosures Beyond SFAS 157’s Three-level Estimates |
title_full |
Voluntary Fair Value Disclosures Beyond SFAS 157’s Three-level Estimates |
title_fullStr |
Voluntary Fair Value Disclosures Beyond SFAS 157’s Three-level Estimates |
title_full_unstemmed |
Voluntary Fair Value Disclosures Beyond SFAS 157’s Three-level Estimates |
title_sort |
voluntary fair value disclosures beyond sfas 157’s three-level estimates |
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Institutional Knowledge at Singapore Management University |
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2017 |
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https://ink.library.smu.edu.sg/soa_research/1056 https://ink.library.smu.edu.sg/context/soa_research/article/2055/viewcontent/VoluntaryFairValueDisSFAS157_2016May_afv.pdf |
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