ABSTRACT

Extant research offers two different insights on the pros and cons of fair value accounting (e.g. Barth 1994; Landsman 2007; Barth & Landsman 2010; Laux & Leuz 2010). While fair value accounting can provide useful and relevant information to current and potential equity holders, it also leaves some level of managerial discretion that may be detrimental to information reporting quality. These findings call for more fine-grained research to understand whether and to what extent firm and market characteristics can directly affect fair value accounting or moderate the relationship between fair value accounting and financial reporting quality.