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An Accounting Perspective On A Crisis Perpetuated Thorugh The Capital Market

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Author Info

  • Carmen Giorgiana Bonaci

    (Babes-Bolyai University)

  • Dumitru Matis

    (Babes-Bolyai University)

Abstract

Our paper analyzes the current financial crisis starting with some recent developments and reactions in the field of accounting. We find that involved parties within the financial system naturally look for a “scapegoat” instead of dealing with reality. Moreover, they try to avoid regulations that would reflect their current financial position and performance. Meanwhile, what reality reveals us is that we are dealing with a crisis of value, or better said valuation, framed by significant changes of paradigms. Starting with thoughts and reactions within trade literature and financial environment, we analyze some mechanisms of credit derivatives that propagated the crisis within the global financial system. Finally, we prove our point in defending fair value accounting and identify key aspects that allow future improvements. The need for informational transparency is emphasized through the whole paper.

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File URL: http://www.rebe.rau.ro/RePEc/rau/journl/FA09/REBE-FA09-A6.pdf
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Bibliographic Info

Article provided by Romanian-American University in its journal Romanian Economic and Business Review.

Volume (Year): 4 (2009)
Issue (Month): 3 (September)
Pages: 61-80

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Handle: RePEc:rau:journl:v:4:y:2009:i:3:p:61-80

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Related research

Keywords: Financial crisis; fair value; derivatives; mortgages; informational transparency; capital markets;

References

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  1. Xavier Debrun & Jean Pisani-Ferry, 2006. "Economic reforms in the euro area: is there a common agenda?," Policy Contributions 25, Bruegel.
  2. Nicolas Véron, 2008. "Fair value accounting is the wrong scapegoat for this crisis," Policy Contributions 19, Bruegel.
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