Fair value accounting: Perspective on stewardship function

Abstract

This paper reviews the existing and emerging perspectives on fair value accounting (FVA) in the context of the stewardship function of financial reporting. This study draws on diverse research threads and theoretical notions to advance a comprehensive assessment of existing FVA research in the context of the trade-off between decision-usefulness and the stewardship objective. By conducting a narrative literature review, the authors identify two distinct domains of literature: FVA-a result of a conceptual shift in financial reporting; and FVA-an enhancement of decision-usefulness in generalpurpose financial reporting. This study posits that FVA can be considered as an evolutionary, rather than revolutionary, development in financial reporting measurement which emerged from financialisation and globalisation of economies. It is further suggested that the ability of FVA to provide stewardship-relevant information may be reduced due to the emphasis it places on the provision of decision-useful information for investment purposes. Therefore, the authors call for a greater engagement between policy-setters and researchers when choosing conceptual underpinnings for financial measurement objectives.

Decision Usefulness and Inflation Accounting: The Case of Turkey

“…However, fair value is insufficient to provide a comprehensive analysis of the company. As part of the stewardship oriented perspective, historical costs should be integrated with fair value (Whittington, 2008;Palea, 2014;Anderson et al, 2015;Andrejcik et al, 2021). The study conducted by Anderson et al(2015) demonstrate that the fair values presented on the face of the financial statements and the historical costs in the footnote created better stewardship judgement than vice versa.…”