ABSTRACT
This chapter offers a standard-setter's perspective on fair value accounting (FVA) and explores how and why it has evolved into a core underpinning of corporate financial reporting at the international level. To understand the mapping between accounting standard-setting and FVA, it is necessary to briefly review changes that have occurred in the institutions that underlie corporate financial reporting. While financial instruments are only one item among the many that firms report on their financial statements, with their use being concentrated in financial institutions, the reach and impact of the standard is probably greater that it appears at first sight. The institutionalization of accounting standard-setting does have profound implications as to the issues standard-setters tackle and how they resolve the challenges they face. On one hand, there is a significant body of research suggesting that FVA-based information is deemed highly relevant by stock market investors.
