The Value Relevance of Financial Institutions’ Fair Value Disclosures: A Study in the Difficulty of Linking Unrealized Gains and Losses to Equity Values

Mozes, Haim A.

doi:10.1111/1467-6281.00095

Cited by 24 publications

(8 citation statements)

References 11 publications

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“…As a final test of robustness, the dependent variable in the above seven equations (stock price, P it ) is replaced with firm value deflated by book value. In this way, we respond to prior studies that caution that tests of fair value information content may be sensitive to model specification (e.g., Simko, 1999;Mozes, 2002). Given the use of book value as a deflator, the independent variables in the models below are deflated accordingly.…”

Section: Empirical Modelsmentioning

confidence: 99%

The Value-Relevance of Derivative Disclosures by Commercial Banks: A Comprehensive Study of Information Content Under SFAS Nos. 119 and 133

Wang

Alam

Makar

2005

Rev Quant Finan Acc

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This study examines the value-relevance of banks' derivative disclosures under Statements of Financial Accounting Standards (SFAS) Nos. 119 and 133. Using the complete time-series of SFAS No. 119 disaggregated notional value disclosures and the most recently available SFAS No. 133 fair value data, this study investigates whether such expanded disclosures provide incremental information content beyond earnings and book value. Our results indicate that banks' notional principal amount disclosures are value-relevant, and that this evidence of incremental information content is robust to the inclusion of recently available fair value data and alternative model specifications. Copyright Springer Science + Business Media, Inc. 2005derivatives, banks, information content,

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Section: Empirical Modelsmentioning

confidence: 99%

The Value-Relevance of Derivative Disclosures by Commercial Banks: A Comprehensive Study of Information Content Under SFAS Nos. 119 and 133

Wang

Alam

Makar

2005

Rev Quant Finan Acc

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“…Prior research has examined the financialstatement effects that these fair-value statements have had on financial institutions (e.g. Mozes, 2002;Cornett et al, 1996), but prior research has not investigated the effects such standards have on the loan decisions of individual loan officers. The recognition of fair-value Lender judgments and fair-value recognition information may affect lenders' judgments, which would also affect the businesses' borrowing opportunities and loan interest rates.…”

Section: Background and Prior Researchmentioning

confidence: 99%

Commercial lender judgments and fair-value recognition: an investigation into the impact of future accounting standards

Warne

2020

ARA

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PurposeThis paper examines the impact that fair-value recognition of non-financial assets has on the judgments of commercial lenders.Design/methodology/approachCommercial lenders, who were attending a national banking conference, participated in a controlled experiment.FindingsThe experimental results show that commercial lenders incorporate fair values into their judgments but only when this information is recognized (vs disclosed) on the financial statements. Additionally, lenders assigned the highest loan interest rates when recognized fair values increased net income, and they assign the lowest loan amounts when recognized fair values decreased net income.Research limitations/implicationsTypical limitations regarding behavioral experiments are acknowledged in the paper. For example, the commercial lenders in this study could not request additional information. In addition, because of the difficulty in obtaining these participants, the sample size is relatively small.Practical implicationsUS Generally Accepted Accounting Principles (GAAP) does not allow the fair-market valuation for most non-current assets while International Financial Reporting Standards (IFRS) require such valuations. The article adds to our understanding about how a significant user group of financial statements, commercial lenders, view GAAP and IFRS accounting.Social implicationsThis article provides insights regarding how commercial lenders' decisions may change based on accounting principles related to asset valuation. Obtaining credit through loans has significant implications for society.Originality/valueThis article is unique because it examines commercial lenders' judgments using different asset valuations on the financial statements.

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“…They found that both Realised and unrealised gains and losses to provide a significant positive effect in regular periods of bank returns, although realised security gains and losses have lower significant effect in a period of weak earnings and capital. Mozes (2002) examined fair value disclosures as required by the Statement of Financial Accounting Standards (SFAS) 119, derivatives disclosure of fair value of the financial instrument to be value relevant. The study adopted residual valuation model to investigate the association between two variables to measure the fair value of book value and security prices of financial instruments.…”

Section: Literature Reviewmentioning

confidence: 99%

The Impact of the New Accounting Reporting Among Listed Firms in Nigerian Stock Market

Abubakar

Abdulsallam

Alkali

2017

Asian Journal of Social Sciences and Management Studies

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The study discusses the relationship between accounting disclosures and market value under new accounting reporting. The study addresses whether accounting information has improved after the IFRS adoption among Nigerian listed firms. The study adopted Ohlson (1995) stock price model that has commonly been used in the capital market for a 5-year data of 129 companies listed in the Nigerian stock market. The Findings of the study have shown disaggregated assets and liabilities have a strong relationship with stock price. However, there is higher association after the adoption of IFRS from the adjusted R 2 . Furthermore, current assets presented more explanatory power than all other variables in the model, signifying that investors rely on current assets for decision making. However, Cramer (1987) Z statistics provided no significance difference in value relevance between the two periods. A possible explanation of the changes could be that investors do not view accounting information to be different in the two periods. Therefore, policy makers, standard setters, and regulators need to come together to address the issue of IFRS adoption by firms in Nigeria.

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The Value Relevance of Financial Institutions’ Fair Value Disclosures: A Study in the Difficulty of Linking Unrealized Gains and Losses to Equity Values

Cited by 24 publications

References 11 publications

The Value-Relevance of Derivative Disclosures by Commercial Banks: A Comprehensive Study of Information Content Under SFAS Nos. 119 and 133

The Value-Relevance of Derivative Disclosures by Commercial Banks: A Comprehensive Study of Information Content Under SFAS Nos. 119 and 133

Commercial lender judgments and fair-value recognition: an investigation into the impact of future accounting standards

The Impact of the New Accounting Reporting Among Listed Firms in Nigerian Stock Market

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