ORCID
Lihong Liang: 0000-0003-2526-7126
Document Type
Article
Date
Fall 2023
Language
English
Disciplines
Accounting
Description/Abstract
This article examines equity market perceptions of fair value reporting for tangible assets. We identify six events—four designated as increasing, two as decreasing—affecting the likelihood of U.S. adoption of fair value reporting for investment property (i.e., real estate) assets, one of the largest asset classes in the world. Fair value adoption in the United States would facilitate convergence of one of the widest remaining disparities between U.S. reporting and International Financial Reporting Standards (IFRS): accounting for tangible investment property assets, where the United States (IFRS) requires depreciated historical cost (recognized or disclosed fair values). Using a sample of U.S. investment property firms, we document an average positive market reaction for movement toward fair value reporting. We further find predictable cross-sectional variation, with the market reaction increasing for firms with greater commitment to high-quality reporting, greater investor demand for fair values, higher financial risk, and staler asset values. Overall, the results are consistent with U.S. equity markets perceiving net benefits to movement toward a fair value reporting approach for this asset class.
Recommended Citation
Conaway, Jenelle K.; Liang, Lihong; and Riedl, Edward J., "Market Perceptions of Fair Value Reporting for Tangible Assets" (2023). Accounting - All Scholarship. 5.
https://surface.syr.edu/acc/5
Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.
