Conditionally conservative fair value measurements

• 成果类型: Article
• 署名作者: Badia, Marc; Duro, Miguel; Penalva, Fernando; Ryan, Stephen
• 署名单位: University of Navarra; IESE Business School; New York University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2016.10.006
• 发表日期: 2017
• 关键词: INSTITUTIONAL OWNERSHIP; asymmetric timeliness; nonaudit services; earnings; INFORMATION

摘要

Firms measure fair values using Level 2 or 3 inputs when items do not trade in liquid markets, limiting market discipline over the measurements. We provide evidence that firms holding higher proportions of financial instruments measured at Level 2 and 3 fair values report more conditionally conservative comprehensive income attributable to fair value measurements, consistent with firms trying to mitigate investors' discounting of the measurements. We further predict and find that this conditional conservatism (1) increases with governance mechanisms that increase the strength and persistence of firms' incentives to report conservatively and (2) decreases with firms' earnings management incentives. (C) 2016 Elsevier B.V. All rights reserved.