Harmonising Basel III and the Dodd Frank Act through international accounting standards: reasons why international accounting standards should serve as “thermostats”
AbstractWhy should differences between regulatory and accounting policies be mitigated? Because mitigating such differences could facilitate convergence – as well as financial stability. The paper “Fair Value Accounting and Procyclicality: Mitigating Regulatory and Accounting Policy Differences through Regulatory Structure Reforms and Enforced Self Regulation” illustrates how the implementation of accounting standards and policies, in certain instances, have contrasted with Basel Committee initiatives aimed at mitigating procyclicality and facilitating forward looking provisioning. The paper also highlights how and why differences between regulatory and accounting policies could (and should) be mitigated. This paper focuses on how recent regulatory reforms – with particular reference to the Dodd Frank Act, impact fair value measurements. Other potential implications for accounting measurements and valuation, will also be considered. Given the tendencies for discrepancies to arise between regulatory and accounting policies, and owing to discrepancies between Basel III and the Dodd Frank Act, would a more imposing and commanding role for international standards not serve as a powerful weapon in harmonizing Basel III and Dodd Frank – whilst mitigating regulatory and accounting policy differences?
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 36149.
Date of creation: 24 Jan 2012
Date of revision:
financial stability; OTC derivatives markets; counterparty risks; disclosure; information asymmetry; transparency; living wills; Volcker Rule; Basel III; Basel II; pro cyclicality; international auditing standards; Dodd Frank Act; fair values;
Find related papers by JEL classification:
- E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
- D0 - Microeconomics - - General
- K2 - Law and Economics - - Regulation and Business Law
- D8 - Microeconomics - - Information, Knowledge, and Uncertainty
- G01 - Financial Economics - - General - - - Financial Crises
- E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
This paper has been announced in the following NEP Reports:
- NEP-ACC-2012-02-20 (Accounting & Auditing)
- NEP-ALL-2012-02-20 (All new papers)
- NEP-REG-2012-02-20 (Regulation)
- NEP-RMG-2012-02-20 (Risk Management)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Laux, Christian & Leuz, Christian, 2009.
"Did fair-value accounting contribute to the financial crisis?,"
CFS Working Paper Series
2009/22, Center for Financial Studies (CFS).
- Christian Laux & Christian Leuz, 2010. "Did Fair-Value Accounting Contribute to the Financial Crisis?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 93-118, Winter.
- Christian Laux & Christian Leuz, 2009. "Did Fair-Value Accounting Contribute to the Financial Crisis?," NBER Working Papers 15515, National Bureau of Economic Research, Inc.
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