The Use of Fair Value in IFRS

Cairns, David

doi:10.1080/09638180600920053

Cited by 73 publications

(37 citation statements)

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“…IFRS have been heavily influenced by the shareholder-based orientation typical of the Anglo-Saxon system (Flower and Ebbers, 2002;Hung and Subramanyam, 2007), in which the principle of ''fair value'' is important but not always decisive (Cairns, 2006). The use of fair value impinges primarily on the book value of equity, which may be volatile (Devalle, 2008).…”

Section: Comparison Of International Accounting Standards (Ias)mentioning

confidence: 99%

Assessing the Value Relevance of Accounting Data after IFRS Introduction in Europe

2014

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Since 2005, European-listed companies have been required to prepare their consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). We examine whether value relevance increased following the introduction of IFRS, using a sample of 3,721 companies listed on five European stock exchanges: Frankfurt, Madrid, Paris, London, and Milan. We find mixed evidence of an increase in value relevance. However, the influence of earnings on share price increased following the introduction of IFRS in Germany, France, and the United Kingdom, while the influence of book value of equity decreased (except for the United Kingdom).

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Section: Comparison Of International Accounting Standards (Ias)mentioning

confidence: 99%

Assessing the Value Relevance of Accounting Data after IFRS Introduction in Europe

2014

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“…Barlev and Haddad () argue, for example, that only under a fair value measurement regime will financial reporting become comparable across countries; that is, fair value measurement by itself enhances the comparability of financial reporting. Cairns (: 19–20) suggests that fair value measurements incorporate notions that were part of national accounting standards and long‐standing principles in financial reporting. He suggests that those opposed to the increased use of fair value measurements were not previously applying national accounting standards in the spirit in which they were intended.…”

Section: Prior Researchmentioning

confidence: 99%

Fair Value Measurements of Control Premiums

Badenhorst

2014

Accounting Perspectives

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Abstract:As the overview of the current state of research within this paper shows, the debate around fair value measurements is far from over. This paper analyses fair value measurement requirements in a controversial scenario, namely when a control premium exists. The analyses of the paper show that, while measurement rules around control premiums could have a material impact on fair value measurements and the financial statements as a whole, significant fair value measurement issues remain unresolved.The conclusion is that fair value measurements should include or exclude control premiums consistently. It is argued that including control premiums for all fair value measurements is the most faithful representation of the underlying economic phenomenon. This paper contributes to the fair value measurement debate by comparing the merits of alternative fair value measurements for control premiums and highlights an area where researchers, investors and other users should exercise caution when evaluating financial statements.

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“…14 On the other hand, the IFRS and the IASB are often argued as having placed less emphasis on reliability (e.g., Whittington, 2007;Ball, 2006). Fair value based accounting measures in IFRS have generated considerable reliability concerns (Cairns, 2006), especially when fair values are estimated based on numerous assumptions using non-market inputs (FASB, 2006). Given the trade-off between relevance and reliability and the documented increased value relevance of accounting information after IFRS adoption, we expect a decrease in the reliability of financial reporting in the post-IFRS adoption period.…”

Section: Hypothesesmentioning

confidence: 99%