ABSTRACT
This chapter is about the adoption of fair value accounting (FVA) by the major accounting standards setting agencies, specifically the International Accounting Standards Board, IASB and, in the US, the Financial Accounting Standards Board, FASB. FVA in contrast to historic cost accounting (HCA) involves a reorientation from the income statement to balance sheet and from historic costs to the disclosure of market values within a reporting entity's accounts. The chapter expresses that it is important to contextualise the adoption of FVA within the financialized firm to assess its operational impact and consequences. It draws upon three key elements from the financialization literature to frame our analysis and arguments about the operational and social consequences of adopting of FVA. The chapter also expresses that changes to accounting practise and disclosure should be evaluated within the context of the financialized firm, in order to reveal contradictions and a heightened risk to society.
