The concept of "fair value" marked a major departure from traditional cost accounting. In theory, under this approach a balance sheet that better reflects the current value of assets and liabilities. Critics of fair value argue that it is less useful over longer time frames and prone to distortion by market inefficiencies resulting in procyclicality in the financial system by exacerbating market swings.

Comprising contributions from a unique mixture of academics, standard setters and practitioners, and edited by internationally recognized experts, this book, on a controversial and intensely debated topic, is a comprehensive reference source which:

  • examines the use of fair value in international financial reporting standards and the US standard SFAS 157 Fair Value Measurement, setting out the case for and against
  • looks at fair value from a number of different theoretical and practical perspectives, including a critical review of the merits and arguments against the use of fair value accounting
  • explores fair value accounting in practice, involvement in the Great Financial Crisis, implications for managerial reporting discretion, compensation and investment

This volume is an indispensable reference that is deserving of a place on the bookshelves of both libraries and all those working in, studying, or researching the areas of international accounting, financial accounting and reporting.

part |21 pages


chapter 1|17 pages

Does the usage of fair values increase systemic risks?

ByAlan Ball, Andrew Haldane

part I|66 pages

Standards and conceptual issues

chapter 2|16 pages

Fair value and the Conceptual Framework

ByAndrew Lennard

chapter 3|15 pages

Fair value accounting

A standard-setting perspective
ByMichel Magnan, Antonio Parbonetti

chapter 5|16 pages

Shareholder value, financialization and accounting regulation

Making sense of fair value adoption in the European Union
ByVera Palea

part II|89 pages

Fair value, risk and financial crisis

chapter 6|15 pages

Measuring fair value when markets malfunction

Evidence from the financial crisis
ByAmir Amel-Zadeh, Geoff Meeks

chapter 7|30 pages

Fair value accounting in financial institutions

ByChristof Beuselinck, Arnt Verriest

chapter 8|19 pages

Bank risk management – and fair value accounting

ByThomas A. Gilliam, Ronny K. Hofmann

chapter 9|23 pages

The use of fair value accounting in risk management in non-financial firms

ByJohn L. Campbell, Jenna D’Adduzio, Jon Duchac

part III|49 pages


chapter 10|18 pages

The history of the fair value term and its measurements

ByMartin E. Persson, Frank L. Clarke, Graeme W. Dean

chapter 11|15 pages

The ‘fairness’ of fair value accounting

Marking-to-market, marking-to-model and financial reporting management
ByKalin Kolev

chapter 12|14 pages

Let the fox guard the henhouse

How relaxing the three-level fair value hierarchy increases the reliability of fair value estimates
ByEster Chen, Ilanit Gavious, Uriel Haran

part IV|102 pages

Specific topics

chapter 13|24 pages

Fair value accounting

A manager’s perspective
ByThomas A. Gilliam, Ronny K. Hofmann

chapter 14|21 pages

Tax-related implications of fair value accounting

ByKay Blaufus, Martin Jacob

chapter 15|14 pages

Fair value accounting and executive compensation

ByGilad Livne, Garen Markarian

chapter 17|16 pages

Fair value accounting

China experience
ByJun Chen, Yong Yu

chapter 18|19 pages

18 Fair value accounting and family firms

ByPietro Mazzola, Massimo De Buglio