Post by Sapphire Capital on Sept 26, 2008 23:57:07 GMT 4
Consequences of Voluntary and Mandatory Fair Value Accounting: Evidence Surrounding IFRS Adoption in the EU Real Estate Industry
Karl A. Muller
Pennsylvania State University - Department of Accounting
Edward J. Riedl
Harvard Business School
Thorsten Sellhorn
WHU - Otto Beisheim School of Management
August 31, 2008
Harvard Business School Finance Working Paper No. 09-033
Abstract:
We examine the causes and consequences of European real estate firms' decisions to provide investment property fair values prior to the required disclosure of this information under International Financial Reporting Standards (IFRS). We find evidence that investor demand for fair value information - reflected in more dispersed ownership - and a firm's commitment to transparency increase the likelihood of providing fair values prior to their required provision under International Accounting Standard 40-Investment Property. We also find that firms not providing these fair values face higher information asymmetry. However, we fail to find that the relatively higher information asymmetry was reduced following mandatory adoption of IFRS. Rather, we find that differences in information asymmetry largely remain. Taken together, this evidence suggests that common adoption of fair value accounting due to the mandatory adoption of IFRS does not necessarily level the informational playing field.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1265065_code698198.pdf?abstractid=1265065&mirid=1
Karl A. Muller
Pennsylvania State University - Department of Accounting
Edward J. Riedl
Harvard Business School
Thorsten Sellhorn
WHU - Otto Beisheim School of Management
August 31, 2008
Harvard Business School Finance Working Paper No. 09-033
Abstract:
We examine the causes and consequences of European real estate firms' decisions to provide investment property fair values prior to the required disclosure of this information under International Financial Reporting Standards (IFRS). We find evidence that investor demand for fair value information - reflected in more dispersed ownership - and a firm's commitment to transparency increase the likelihood of providing fair values prior to their required provision under International Accounting Standard 40-Investment Property. We also find that firms not providing these fair values face higher information asymmetry. However, we fail to find that the relatively higher information asymmetry was reduced following mandatory adoption of IFRS. Rather, we find that differences in information asymmetry largely remain. Taken together, this evidence suggests that common adoption of fair value accounting due to the mandatory adoption of IFRS does not necessarily level the informational playing field.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1265065_code698198.pdf?abstractid=1265065&mirid=1