Voluntary fair value disclosures beyond SFAS 157's three-level estimates

• 成果类型: Article
• 署名作者: Chung, Sung Gon; Goh, Beng Wee; Ng, Jeffrey; Yong, Kevin Ow
• 署名单位: Wayne State University; Singapore Management University; Hong Kong Polytechnic University; Peking University; Peking University Shenzhen Graduate School (PKU Shenzhen)
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-016-9384-9
• 发表日期: 2017
• 页码: 430-468
• 关键词: information-content; bad news; earnings; management; reliability; contribute; MARKETS; disavow; FIRMS; price

摘要

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 investors' 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 improve investors' perception about 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 disclosures reveal that the following types of information are particularly important to investors: discussion of the external and independent pricing of fair value estimates and their proper classification 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 toward the more opaque fair value estimates.