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Fair Value Accounting

Implications for Users of Financial Statements


Kristian Bachert

Fair value accounting is viewed as a major feature of IFRS and several standards either require assets to be measured at fair value or at least provide an option to fair value measurement instead of applying historical cost. While it is argued that fair values provide more timely and relevant information, the global financial crisis led to a considerable debate about the usefulness of fair value accounting. The study examines the implications of fair value accounting for financial analysts and nonprofessional investors. It provides evidence that, even if financial analysts find it challenging to produce accurate forecasts under a fair value regime, nonprofessional investors make larger investments and are more confident with their judgments for fair value firms.


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I conducted this study on fair value accounting during my time as a PhD student at the Chair of International Accounting at the University of Münster. The thesis was accepted as a dissertation by the Münster School of Business and Economics in January 2012. In this foreword, I wish to express thanks to everyone who supported me during the pro- cess of accomplishing this thesis. First, I want to thank my supervisor Prof. Dr. Peter Kajüter who accepted me as a PhD student and provided me with great support during the time at his chair. The numerous and valuable discussions greatly contributed to the success of this study and motivated me to never give up working on this project. I would also like to thank Prof. Dr. Christoph Watrin who reviewed and evaluated my study as a second referee. My sincere thanks are further given to Prof. em. Dr. Heinz Grossekettler for being the third referee at my disputation. Special thanks go to Markus Titze from FactSet Research Systems Inc. for providing me with empirical data on financial analysts’ forecasts. Finally, I would like to thank all students of the University of Münster who par- ticipated in the laboratory experiment and thus made my study possible. I would not have come to a successful end with my thesis without the support and en- couragement of my dear colleagues and friends at the Chair of International Accounting. I have very pleasant memories of our annual sailing trips,...

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