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How Does Fair Value Measurement under IAS 39 Affect Disclosure Choices of European Banks?


  • Bischof, Jannis

    () (Sonderforschungsbereich 504)

  • Wüstemann, Jens

    () (Lehrstuhl für ABWL und Wirtschaftsprüfung/Sonderforschungsbereich 504)


There is a considerable degree of heterogeneity in the way how European banks present their financial instruments in IFRS financial statements. We identify three major presentation formats that are currently applied: a presentation by measurement category, by product, and by purpose. We find the use of the measurement categories, which were originally designed by IAS 39 for measurement purposes, as line items to be the prevalent choice across countries. We analyze the factors that could explain this disclosure choice. We find that a corresponding regulatory recommendation has a strong effect on the choice. We further find that the disclosure of measurement categories is negatively associated with the relative book value of financial assets measured at fair value. This finding suggests discretionary disclosure management by banks. We conclude, based on behavioral theory, that banks expect investors to have a negative bias in the risk perception of assets measured at fair value.

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  • Bischof, Jannis & Wüstemann, Jens, 2007. "How Does Fair Value Measurement under IAS 39 Affect Disclosure Choices of European Banks?," Sonderforschungsbereich 504 Publications 07-75, Sonderforschungsbereich 504, Universität Mannheim;Sonderforschungsbereich 504, University of Mannheim.
  • Handle: RePEc:xrs:sfbmaa:07-75
    Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.

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    References listed on IDEAS

    1. Richard Lambert & Christian Leuz & Robert E. Verrecchia, 2007. "Accounting Information, Disclosure, and the Cost of Capital," Journal of Accounting Research, Wiley Blackwell, vol. 45(2), pages 385-420, May.
    2. Christian Leuz, 2003. "IAS Versus U.S. GAAP: Information Asymmetry-Based Evidence from Germany's New Market," Journal of Accounting Research, Wiley Blackwell, vol. 41(3), pages 445-472, June.
    3. Mitchell Berlin, 2004. "True confessions: should banks be required to disclose more?," Business Review, Federal Reserve Bank of Philadelphia, issue Q4, pages 7-15.
    4. Li Wang & Pervaiz Alam & Stephen Makar, 2005. "The Value-Relevance of Derivative Disclosures by Commercial Banks: A Comprehensive Study of Information Content Under SFAS Nos. 119 and 133," Review of Quantitative Finance and Accounting, Springer, vol. 25(4), pages 413-427, December.
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