IDEAS home Printed from https://ideas.repec.org/a/bpj/aelcon/v12y2022i2p181-190n8.html
   My bibliography  Save this article

Exploring the Relevance and Reliability of Fair Value Accounting

Author

Listed:
  • Fukui Yoshitaka

    (Graduate School of International Management, Aoyama Gakuin University, 4-4-25 Shibuya, Shibuya-ku, Tokyo, 150-8366, Japan)

  • Saito Shizuki

    (University of Tokyo, Tokyo, Japan)

Abstract

While the FASB had regarded relevance and reliability as two of the most important qualitative characteristics for years, it replaced reliability with faithful representation revising its Concepts Statement No. 2 in 2010. Even if fair values are relevant for the measurement of assets and liabilities, these figures are not necessarily reliable or verifiable. We believe this point is the central message of Ramanna, K. (2022). Unreliable accounts: How regulators fabricate conceptual narratives to diffuse criticism. Accounting, Economics and Law: A convivium forthcoming. The application of fair value measurement has been substantially extended recently to income recognition of not-for-trading financial instruments and even non-financial assets. Is this extension due to the primacy of relevance over reliability, or the relaxing of requirement for reliability toward faithful representation? Whatever measurement method we use, it is absolutely necessary to construct a system of concepts on which the purpose of measurement should be established. In spite of the fact that any measurement method is a means to intended purposes, if we first chose a particular method and applied it to every situation slavishly, we would become similar to a bogus doctor selling a fake drug as panacea valid for any disease.

Suggested Citation

  • Fukui Yoshitaka & Saito Shizuki, 2022. "Exploring the Relevance and Reliability of Fair Value Accounting," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 12(2), pages 181-190, May.
    • Handle: RePEc:bpj:aelcon:v:12:y:2022:i:2:p:181-190:n:8
    DOI: 10.1515/ael-2020-0086
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/ael-2020-0086
    Download Restriction: Download restriction for institutions: For access to full text, subscription to the journal is required. Individual readers who register with De Gruyter Online get free access.
    File URL: https://libkey.io/10.1515/ael-2020-0086?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    reliability; relevance; faithful representation; fair value accounting; accounting measurement;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:aelcon:v:12:y:2022:i:2:p:181-190:n:8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.