Article,
To Fair Value or Not to Fair Value: A Broader Perspective.
Abacus, 44 (2): p181 - 208 (20080601)
Abstract
Fair value is considered here with respect to the two
primary objectives of financial statements proposed in the joint
conceptual framework that is under development by the FASB and the IASB,
namely (a) informativeness—to assist providers of capital in predicting,
evaluating, and comparing the amounts, timing and uncertainty of future
cash flows, and (b) stewardship—to assist in evaluating how efficient
and effective managers have been in enhancing shareholders’ value. More
specifically, a comprehensive set of accounting measures and a set of
corporate governance reforms intended to align corporate insiders’ and
auditors’ behaviour and decisions with the interests of investors is
outlined. Suggested reforms show how to present a mix of effectively
historical quantifications, exit values, and the discounted values of
future cash flows expected from the particularized use of combinations
of assets within the firm. Additionally, the article describes how
markets can be reformed in order
