TY - JOUR
T1 - Fair value measurement and accounting restatements
AU - Lin, Yi Hung
AU - Lin, Steve
AU - Fornaro, James M.
AU - Huang, Hua Wei Solomon
N1 - Funding Information:
We thank the participants in the AAA 2011 annual conference in Denver, Colorado, and Workshops at Florida International University, Louisiana State University and National Cheng Kung University for their helpful comments on this paper. Hua-Wei Huang gratefully acknowledges the National Science Council, Taiwan, ROC, for support of this work under contract (NSC 100-2410-H-006-102).
Publisher Copyright:
© 2017 Elsevier Ltd
Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2017/9
Y1 - 2017/9
N2 - This study investigates the association between accounting restatements and reporting different levels of fair value measurements as defined by SFAS No. 157. We find that firms with higher ratios of Level 3 fair value assets (i.e., financial assets which fair values are determined by unobservable, firm-generated inputs) to total assets are more likely to subsequently restate their financial statements. Further analysis shows that this association is driven by the restatements caused by errors and managerial manipulation. Overall, our results suggest that use of less reliable (Level 3) fair value measurements may reduce financial reporting quality.
AB - This study investigates the association between accounting restatements and reporting different levels of fair value measurements as defined by SFAS No. 157. We find that firms with higher ratios of Level 3 fair value assets (i.e., financial assets which fair values are determined by unobservable, firm-generated inputs) to total assets are more likely to subsequently restate their financial statements. Further analysis shows that this association is driven by the restatements caused by errors and managerial manipulation. Overall, our results suggest that use of less reliable (Level 3) fair value measurements may reduce financial reporting quality.
UR - http://www.scopus.com/inward/record.url?scp=85025674149&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=85025674149&partnerID=8YFLogxK
U2 - 10.1016/j.adiac.2017.07.003
DO - 10.1016/j.adiac.2017.07.003
M3 - Article
AN - SCOPUS:85025674149
VL - 38
SP - 30
EP - 45
JO - Advances in Accounting
JF - Advances in Accounting
SN - 0882-6110
ER -