The Value Relevance of Fair Value Levels: Time Trends under IFRS and U.S. GAAP

38 Pages Posted: 30 Mar 2021

See all articles by Andrei Filip

Andrei Filip

ESSEC Business School

Ahmad Hammami

John Molson School of Business, Concordia University

Zhongwei Huang

Fudan University - School of Management

Anne Jeny

IESEG School of Management

Michel Magnan

Concordia University - Department of Accountancy

Rucsandra Moldovan

John Molson School of Business, Concordia University

Date Written: January 2, 2021

Abstract

The IASB’s post-implementation review of IFRS 13 Fair Value Measurement motivates our analysis of the evolution of the value relevance of fair value (FV) levels over time on banks that report under IFRS and U.S. GAAP. For both sets of standards, results provide evidence that is consistent with (1) an increase in value relevance across all three FV levels over time, and (2) a convergence of the value relevance of the three FV levels over time. However, FV levels exhibit systematically higher value relevance under U.S. GAAP compared to IFRS. Such gap has closed to some extent since the enactment of IFRS 13. This evolution is likely due to learning about FV accounting and changes in financial reporting regulations that increased disclosure requirements. These findings confirm the IASB’s conclusions that FV levels’ disclosure is useful to users of financial statements, but also emphasizes preparers and investors’ learning over time.

Keywords: Fair value hierarchy; Fair value levels; Fair value measurement; IFRS 13; SFAS 157; ASC 820

Suggested Citation

Filip, Andrei and Hammami, Ahmad and Huang, Zhongwei and Jeny, Anne and Magnan, Michel and Moldovan, Rucsandra, The Value Relevance of Fair Value Levels: Time Trends under IFRS and U.S. GAAP (January 2, 2021). Available at SSRN: https://ssrn.com/abstract=3815064 or http://dx.doi.org/10.2139/ssrn.3815064

Andrei Filip

ESSEC Business School ( email )

3 Avenue Bernard Hirsch
CS 50105 CERGY
CERGY, CERGY PONTOISE CEDEX 95021
France
+33 1 34 43 33 61 (Phone)

Ahmad Hammami

John Molson School of Business, Concordia University ( email )

Montreal, Quebec H3G 1M8
Canada

Zhongwei Huang

Fudan University - School of Management ( email )

No. 670 Guoshun Road
Shanghai, 200433
China

HOME PAGE: http://huang-zw.github.io

Anne Jeny

IESEG School of Management ( email )

Socle de la Grande Arche
1 Parvis de la Defense
Puteaux, Paris 92800
France

Michel Magnan

Concordia University - Department of Accountancy ( email )

Montreal, Quebec H3G 1M8
Canada

Rucsandra Moldovan (Contact Author)

John Molson School of Business, Concordia University ( email )

Montreal, Quebec H3G 1M8
Canada
+1-514-848-2424 ext 2528 (Phone)

HOME PAGE: http://https://sites.google.com/site/rucsandramoldovan

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
63
Abstract Views
280
rank
426,745
PlumX Metrics