Fair Value Accounting and Managers' Hedging Decisions

• 成果类型: Article
• 署名作者: Chen, Wei; Tan, Hun-Tong; Wang, Elaine Ying
• 署名单位: University of New South Wales Sydney; Nanyang Technological University; University of Massachusetts System; University of Massachusetts Amherst
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/j.1475-679X.2012.00468.x
• 发表日期: 2013
• 页码: 67-103
• 关键词: TO-MARKET; VALUE-RELEVANCE; income; banks; anticipation; speculation; INFORMATION; valuation; panacea; cost

摘要

We conduct two experiments with experienced accountants to investigate how fair value accounting affects managers real economic decisions. In experiment 1, we find that participants are more likely to make suboptimal decisions (e.g., forgo economically sound hedging opportunities) when both the economic and fair value accounting impact information is presented than when only the economic impact information is presented, or when both the economic and historical cost accounting impact information is presented. This adverse effect of fair value accounting is more likely when the price volatility of the hedged asset is higher, which is a situation where, paradoxically, hedging is more beneficial. We find that the effect is mediated by participants relative considerations of economic factors versus accounting factors (e.g., earnings volatility). Experiment 2 shows that enhancing salience of economic information or separately presenting net income not from fair value remeasurements reduces the adverse effect of fair value accounting. Our findings are informative to standard setters in their debate on the efficacy of fair value accounting.