Does Fair Value Accounting Provide More Useful Financial Statements than Current GAAP for Banks?

• 成果类型: Article
• 署名作者: McInnis, John M.; Yu, Yong; Yust, Christopher G.
• 署名单位: University of Texas System; University of Texas Austin; Texas A&M University System; Texas A&M University College Station
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52007
• 发表日期: 2018
• 页码: 257-279
• 关键词: VALUE-RELEVANCE; value disclosures; Cash flows; INFORMATION; earnings; instruments; governance; valuation; income

摘要

Standard setters contend that fair value accounting yields the most relevant measurement for financial instruments. We examine this claim by comparing the value relevance of banks' financial statements under fair value accounting with that under current GAAP, which is largely based on historical costs. We find that the combined value relevance of book value of equity and income under fair value is less than that under GAAP. We also find that fair value income is less value-relevant than GAAP income because of the inclusion of transitory unrealized gains and losses in fair value income. More surprisingly, we find that book value of equity under fair value is not more value-relevant than under GAAP, due both to divergence between exit value and value-in-use and to measurement error in fair value estimates. Overall, our results suggest that financial statements under fair value accounting provide less relevant information for bank valuation than financial statements under current GAAP.