Suchergebnisse

This paper evaluates the role of fair value accounting in recent financial crisis, and examines whether the call for its demise is justified. Critics argue that fair accounting regulation added to the volatility in financial markets and aggravated financial crisis. On the other hand, supporters of this regulation argue that fair value accounting has been the victim of the recent financial crisis. They believe that this regulation is important for providing transparent, reliable, and accurate information on asset values to investors. After evaluating the impact of fair value accounting regulation on financial crisis, we examine negative and positive aspects of this regulation. Our discussion shows that fair value accounting provides useful information during stable market conditions, but its usefulness may become questionable during unstable and volatile financial markets. Overall, this regulation has the support of financial professional bodies. Some professionals are, however, concerned about recent modification to the fair value accounting rule, i.e., FAS 157-4, because this modification may not enhance reliability and accuracy of financial information. Despite recent modification, discussion on fair value accounting is far from over. Critics of the regulation still believe that this regulation should be eliminated, but the positive aspects of this regulation support its continuation.

Institutional differences across countries present special challenges to achieve uniformity or at least harmony in financial reporting across countries. We evaluate in this paper how accounting traditions, ownership and governance structures of Italian companies affect implementation of the European Union mandated International Financial Reporting Standards (IFRS) by Italian companies. This evaluation will enable investors, especially international investors, to have a better understanding of financial reporting by Italian companies and it will also highlight the problems and issues facing Italian companies to implement IFRS.