Ethics of Care and Decisions of Financial Statement Preparers to Manage Earnings

Rentfro, Randall; Hooks, Karen L.

doi:10.1016/s1574-0765(06)11007-9

Cited by 2 publications

(1 citation statement)

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“…One stream of the literature has focused on the judgment involved in fair value determination and, hence, on the creation part of financial reports (e.g., Hodder and Sheneman 2019;Rentfro and Hooks 2006). In this context, Danile and McCarthy (2007, 47; emphasis added)-concurring with Eugene Flegm, former CFO of General Motors-believe "that the many frauds committed by top management, the largest in history, can be traced not only to the general decline in values in the past 30 years, but also to the steady move to fair value accounting by the FASB."…”

Section: Literature Reviewmentioning

confidence: 99%

On the Ethics of Fair Value Accounting: Distributive Effects, Distributive Injustice, and Implications for Social Peace

Rapp,

Herbener,

Gordon

2024

Quarterly Journal of Austrian Economics

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Fair value accounting is at the heart of arguably the world’s most prominent accounting standards, particularly US GAAP and IFRS. Fair value measurement has been the subject of intense debate. Among other things, it has been analyzed from an ethical perspective. However, this discussion has mainly been limited to the judgment involved in fair value measurement and the ethics of fair value in its ability to provide decision-useful information to interested parties. This study pushes the boundaries by adding a new dimension to the discussion of the ethics of fair value accounting by examining its ethics from a more systemic and societal perspective. Drawing on Austrian business cycle theory, it argues that fair value accounting facilitates certain distributive effects in inflationary monetary environments, thereby contributing to distributive injustice and potentially to social discord. In this respect, fair value accounting—in contrast to historical cost accounting—should not be considered fair or just, but unethical instead.

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Section: Literature Reviewmentioning

confidence: 99%