Disclosure Value Research Articles

Evidence on the Decision Usefulness of Fair Values in Business Combinations

In 2001, SFAS 141 (ASC 805) required that identifiable assets and liabilities acquired in a business combination be initially recorded at fair value rather than pre-acquisition book value. The FASB argued that fair value measurement would provide more decision-useful information about future cash flows following business combinations. However, opponents argued that fair values are often difficult to estimate and may be too noisy to be useful. In this study, we examine whether fair value measurement for identifiable assets and liabilities provides incremental decision-useful information about post-acquisition cash flows and offer two main findings. First, we find that fair values have incremental predictive ability for post-deal cash flows (beyond pooled book values), but only in limited circumstances: (i) horizontal (i.e., same-industry) deals, (ii) deals that do not involve R&D-intensive targets, and (iii) deals in which managers have less incentive to over-allocate purchase price to goodwill. This suggests that fair value measurement in business combinations only enhances decision usefulness in transactions when fair values are more reliably estimable and/or less subject to manager incentives. Second, we find that analysts update their cash flow forecasts to reflect the information provided by fair value disclosures, but only in transactions where we find that fair values are decision useful. Overall, our results suggest that there are limits in the extent to which fair value measurement for acquired identifiable assets and liabilities provides decision-useful information about future cash flows, and that capital market participants appear to recognize those limits as reflected in their decision making.

Legal principles protection of consumer rights of financial services

The article is devoted to the research of legal bases of protection of the rights of consumers of financial services in Ukraine. Based on a systematic analysis of current legislation and special sources, it is stated that the legal mechanisms for protecting the rights of consumers of financial services are currently at a rather low level. There are significant problems with the existing system of protection of the rights of consumers of financial services, which requires the introduction of its new model, which will provide a real increase in consumer confidence in financial institutions, providing legal guarantees for the protection of their rights and raising their financial awareness.The article analyzes the legal acts of the European Union aimed at protecting the rights of consumers of financial services, which stipulates the requirement of sufficient information when purchasing such services, the provision of services in the financial sector should not be carried out by direct or indirect deception of the consumer.The provisions of the new Law on Consumer Protection of Financial Services are investigated, which provides for the establishment of an effective mechanism for the protection of consumer rights, elimination of loopholes and inconsistencies in the current system of regulatory protection of consumer rights, and introduces the same rules for banks and non-banking institutions in the field of advertising financial services and providing information about them. The requirement of the Law on Compulsory Disclosure of the Real Value of Financial Products and Services will not allow financial institutions to indicate false interest rates on loans and deposits in advertising. The Law also provides for the right of authorized bodies to apply to entities providing financial services measures of influence and to impose administrative penalties on their officials.An important element of the legal mechanism for protecting the rights of consumers of financial services is the adoption of the Law on «Split», which provides for the reduction of the number of regulators and supervisors in the markets of non-banking financial services and empowering the National Bank of Ukraine with the powers of the regulator of the non-banking financial services market provided by insurance, leasing, leasing companies, credit unions, pawnshops and other financial companies. It will help create a financial system that meets international standards

Investigating caloric values and consumers’ perceptions of Nova Scotia rosé wines

In Nova Scotia, Canada, wine production has been increasing, yet little research has been done to identify and classify the sensory properties of Nova Scotia (NS) rosé wines. The first objective of this study was to identify the attributes consumers use to describe NS rosé wines. The second aim was to identify if presenting caloric labels on wine bottles would impact consumers' sensory perception. The first trial asked consumers (n = 85) to use projective mapping (PM) and ultra-flash profiling (UFP) to describe NS rosé wines (n = 8). In the second trial, consumers (n = 260) were asked to complete a check-all-that-apply (CATA) questionnaire, using the most frequently cited attributes from the PM and UFP trial, and to score their liking on 9-point hedonic scales (n = 4). Each wine was evaluated without a label and with each of the four fabricated caloric values, low (15 Calories), normal (100 Calories), high (180 Calories), and highest (240 Calories) per one serving. The projective mapping trial found that there were two main categories of rosé wines identified by consumers, those with fruit flavour and those lacking in fruit flavour. The penalty analysis from the consumer trial demonstrated that fruit attributes drove consumer liking of rosé wine. The consumer trial also displayed no significant difference between the caloric value and liking of rosé wines, even when the results were separated based on gender. Therefore, the findings support that the disclosure of caloric values on bottles will not influence consumers' sensory perceptions of wine. For future research, complete nutrition labels and not just calories alone should be used to determine their effect on consumers' perceptions.

PROCEDURE OF CURRENT VALUE EVALUATION OF THE CREATED TRADE MARK OF THE COMPANY

Introduction. Market conditions define the brand as one of the levers that affects the competitiveness and value of the company's business. Trademarks, which have been created, are not recognized as assets on the company's balance sheet and are not included in the value of the business when in the financial statements, are disclosed. A number of issues remains to be resolved. They are connected with the analytical procedure for understanding the impact of the created brand on the value of the company's business by external and internal users. Purpose. The article aims to develop the analytical procedure for estimating the present value of the created trademark of the company, which provides relevant information to external and internal users about the process of creating "branded" capital of the company. Method (methodology). The methods of scientific generalization have been used in substantiation of theoretical approaches to the estimation of the present value of the created trademark of the company. They are the methods of general scientific abstraction, induction and deduction methods, method of analysis and synthesis, method of analogy (to develop the proposals for the practical calculation of the value of the created trademark of the company on the information of the financial statements); free cash flow method (to determine the present value of the company's business); extrapolation method (to predict the future economic benefits of the company). Results. The exploration of issues related to the disclosure of the brand value of the business of the company in the integrated reporting or management report has been carried out. The priority of applying the revenue approach to the expert evaluation of the created intellectual property objects of the company has been determined. The expediency of using the free cash flow method to estimate the present value of the created trademark as an intellectual asset of the operating company has been substantiated. The relationship between goodwill and company brand value has been argued. It has been proposed the model for calculating the present value of company brand, which is based on the goodwill amount calculation method and the free cash flow method. It has been proposed the analytical procedure to determine the present value of the created trademark of the company in the form of a table, containing a list of analytical transactions and an analytical conclusion. The present value of the created trademark of a particular international company has been calculated.

A Study on Research Trends of the Fair Value Disclosure and Measurement

A Study on Research Trends of the Fair Value Disclosure and Measurement

The Effect of Fair Value Method Adoption: Evidence from Real Estate Firms in the EU

The adoption of the International Accounting Standard 40 (IAS 40) in 2005 by public companies in the European Union required firms to disclose the fair value of their investment properties. We study whether this increase in the transparency in financial reporting reduces information asymmetry and leads to higher pricing efficiency and improved liquidity. We investigate this question in the context of the real estate industry, which due to its unique structure stands to be affected the most by the adoption of the fair value method. We observe that post regulation the coefficients of variation of trading volume and daily turnover decreased significantly, while turnover ratio increased significantly. In addition, these effects are stronger for larger firms. We further note that although post-IAS 40 asymmetric information decreases and liquidity increases, the disclosure of fair value does not lead to lower NAV deviation. Furthermore, our results suggest that fair value disclosure exacerbates NAV deviation and illiquidity during the crisis period.

THE APPLICATION OF FAIR VALUE ACCOUNTING IN BOSNIA AND HERZEGOVINA

This study investigates the application of fair value ac- counting in companies in Bosnia and Herzegovina. The study was conducted on a sample of 190 companies. The application of fair value accounting causes a lot of controversy related to the relevance and reliability of fair value information. It is believed that the extent to which fair value measurement is used reflects attitudes of financial statement preparers about the usefulness of this model at its best. The findings of this study sug- gest that most companies in Bosnia and Herzegovina do not have tendency to apply fair value accounting. It is found that half of the companies in the sample do not use fair value accounting at all. Almost half of the com- panies that use fair value accounting use it just because they own assets that require fair value measurement. Fair value accounting is much more used in financial and larger companies than in non-financial and smaller companies. Companies mostly use fair value accounting for the measurement of investment property. However, they use it for the measurement of intangible assets at a minimum. The findings also suggest that the application of fair value accounting increases the uncertainty in fi- nancial statements. The quality of fair value disclosures is very low. Numerous companies do not disclose infor- mation on fair value hierarchy and valuation techniques that were used for fair value measurement. Companies that disclose this information mostly use indirectly ob- servable inputs (Level 2) for fair value measurement and these create a lot of room for earnings management.

Evaluating Constitutive Dimensions of CSR E-Communication: A Comparison between ‘Business-To-Business’ and ‘Close-To-Market’ Companies

ABSTRACTPurpose – The aim of the paper is to analyze if the proximity to market influences the extent of disclosure of Corporate Social Responsibility (CSR) on corporate websites of companies included in the Dow Jones Sustainability World Index (DJSWI).Methodology/Approach – Starting from an examination of the extant literature on CSR e-communication, the paper identified several key dimensions of the selected topic. Then, through a content analysis research design, the study explores how companies communicate on corporate websites their CSR efforts, applying a four-dimensional model.Findings – Different from assumptions (not demonstrated) in the previous research, the paper highlights that Business-to-Business (B-to-B) companies are more prone than Close-to-Market (C2M) organizations to be engaged in the disclosure both of CSR orientation (i.e. how their value statements reflect their commitment to sustainability) and structure (i.e. how they communicate their governance structure and certifications of CSR and how they engage with stakeholders). Moreover, the paper shows similarities in how C2M and B-to-B companies communicate their efforts in using interactive tools and presenting CSR content on their corporate websites.Research Implications – From a conceptual point of view, both institutional and political theories can explain why disclosure of CSR values, governance structures, and engagement mechanisms is becoming more and more frequent in B-to-B companies. These kinds of organizations are, in fact, potentially more problematic in terms of environmental issues. Hence, the paper demonstrates that the increased public scrutiny pushes B-to-B companies to play the parts of ‘political actors’, thus making them more likely to invest in processes that engage different stakeholders in CSR decision-making.Practical Implications – The research has the merit of tracing back the main differences between C2M and B-to-B companies in terms of CSR e-communication to the inherent nature of the industry to which organizations belong. This involves the view that managers of B-to-B companies can benefit from suggestions on how to use CSR e-communication to sustain specific corporate strategies. B-to-B companies are becoming more aware that mechanisms for approaching CSR communication can help them to prevent greenwashing accusations, which are very common and risky for industrial companies and their partners.Originality/Value/Contribution of the paper – The paper adds several insights to the debate on CSR communication in B-to-B research, pointing out the constitutive dimensions and the diverse motivations that can push companies to adopt specific approaches in CSR disclosure.

The Dilemma of International Financial Reporting Standards and the Optimization of Financial Reporting—From the Perspective of Marx’s Theory of Fictitious Capital

Following the outbreak of the subprime financial crisis, international accounting standards came under heavy fire for being strongly pro-cyclical. Under those standards, financial reporting mixes financial statement data with financial analysis data, seriously weakening the public interest function of financial reporting. An analysis using Marx’s fictitious capital theory shows that fair value accounting and asset impairment accounting are both defective. In line with the principle of “accounting based on legal fact,” we use the methodology of “historical cost accounting plus fair value disclosure” to distinguish between legal fact and financial expectations in financial reporting. This is a viable means of appropriately resolving the contradiction between ensuring that enterprise financial reporting observes domestic law and ensuring that it accords with international trends.

Pengaruh Corporate Governance dan Corporate Social Responsibility terhadap Kualitas Laba dan Nilai Perusahaan

This study aims to examine the effect of corporate governance (CG) and corporate social responsibility (CSR) disclosure of earnings quality and firm value. Corporate governance with board diversity is measured from the aspect of age and background study of board members. CSR disclosure in the company’s annual report is measured by the score of Global Reporting Initiative (GRI). This study measures the company’s earnings quality with discretionary accruals (DA), and the firm value with tobin’s q ratio. This study use a sample of 160 non-financial companies listed on the Indonesia Stock Exchange (BEI), so the total observations in this study are 640 samples. The result of this study provide empirical evidence that age and background study of board members don’t affect the quality of earnings and firm value, but the CSR activities affect the firm value.

Expected Loan Loss Provisioning: An Empirical Model

The new accounting standard requires that financial institutions estimate expected credit losses on their loan portfolios. The predictability of long-term losses, however, remains an open question. We develop a model that predicts long-term loan losses and incorporates adjustments for macroeconomic forecasts. The model combines cross-sectional predictions with a high-dimensional dynamic factor model that tracks aggregate losses over the business cycle. The model predicts long-term losses out-of-sample with significantly greater accuracy than the Harris et al. (2018) model and several other alternatives. It is also more effective at detecting bank failures. We use the model to estimate the present value of expected losses and the expected loss overhang for a given bank-quarter. The estimated present values subsume information in reported allowances and in fair value disclosures about long-term losses; the evidence is also consistent with loss overhang distorting banks’ decisions. The model provides a useful benchmark to study loan loss provisioning.

Disclosure of CSR Performance and Firm Value: New Evidence from South Africa on the Basis of the GRI Guidelines for Sustainability Disclosure

Prior CSR and firm performance research has produced mixed results. Even so, numerous researches examining this relationship from the perspective of international standardisation have primarily concentrated on developed economics. This leaves an obvious gap within the extant literature with regards to evidence from sub-Saharan Africa. The aim of this study is to investigate the relationship between the extent of CSR disclosure performance and firm value, in an emerging institutional setting. Using hand collected data of South African listed companies, we apply the GRI G3.1 guidelines, as a measure of disclosure performance. Based on the panel data fixed effect model, we document a positive but insignificant relationship between CSR disclosure performance and firm value. Secondly, a negative and insignificant relationship was found between environmental disclosure performance and firm value. Lastly, we found a positive and statistically significant relationship between social disclosure performance and firm value. Overall, our findings suggest that CSR disclosure has a limited effect on firm value. Our findings hold for a set of robustness tests. Our findings suggest that the incorporation of sustainability disclosure, on the basis of GRI, is moderately high among the selected companies. Implications of our results suggest that CSR disclosure may not necessarily influence firm value, despite its numerous benefits. We contribute to this line of research from a multi-theoretical perspective.

Fair value disclosures and crash risk

In response to the public criticism of the inadequate disclosures mandated by SFAS No. 157, Fair Value Measurements, the FASB issued ASU (Accounting Standards Update) 2010–06, Improving Disclosures about Fair Value Measurements, and ASU 2011–04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements, in an effort to increase the reporting transparency. We examine whether the increased fair value disclosures required by these two updates effectively decrease crash risk, defined as the frequency of extreme negative stock returns. In support of the hypothesis, we find that increased transparency from these updates reduces crash risk among U.S. banking firms and that the reduction is greater in banks that have a higher level of Level 3 financial assets.

تعدد بدائل القیاس المحاسبي وفقا لمعاییر المحاسبة وأثرها على الأزمة المالیة العالمیة )(2008-200

The aim of this study is to identify the causes and consequences of the globalfinancial crisis (2007-2008) from an accounting perspective. In view of the complexity ofthe causes of the global financial crisis and the tendency of many opinions to bechallenged and accused of accounting standards, especially those relating to accountingmeasurement, especially fair value, the researchers discussed the presentation ofmeasurement alternatives and accounting valuation in accordance with InternationalAccounting Standards (IAS / IFRS). The analysis of accounting measurement risk and itsrole in the global financial crisis. The most important measures taken before theInternational Accounting Standards Board (IASB) and the US Financial AccountingStandards Board (FASB) during and after the global financial crisis. The researchersfound that the expansion of high-risk mortgages is one of the main causes of the globalfinancial crisis. There are many negative effects of this crisis on the economies ofdeveloped and developing countries. There is an exaggeration in criticism of fair valuestandards. Accounting Legislation (IASB) and the US Financial Accounting StandardsBoard (FASB) have not had precedent by taking several measures, measures and steps.IASB issued several amendments and improvements and issued several standards, suchas the amendment of IFRS 7 to improve fair value disclosure techniques for financialinstruments, and IFRS 9 Financial Instruments issued in 2009. IFRS 13, Measurement offair value.

Nilai-Nilai Prososial Dalam Kaulinan Oray-Orayan Di Sekolah Dasar Negeri Isola Kota Bandung

The verbal and gestures values disclosure of west java traditional play named “Kaulinan Orayorayan” is needed as a starting poin in improving learning at schools. The article explores and identifies the values of pro-social of the physical and phsychological activities of “Kaulinan Oray-orayan” in which etnopedagogically is rich of cultural and national values. Based on semiotics study and descriptive analysis, it is identified the pro-social values in “Kaulinan Orayorayan” such as getting fun, entertaining, helping, building friendship, sacrificing, generousity, and sharing. It is recommended that the valeus of “Kaulinan Orayorayan” should be applied and improved in the teaching and learning practices at schools.

How have US banks adopted the Financial Accounting Standards Board's Level 3 fair value disclosure rules?

AbstractWe examine how banks have complied with the Financial Accounting Standards Board's disclosure rules on Level 3 recurring fair value measurements. We document widespread noncompliance with the basic disclosure requirements. We also find that the noncompliant banks are smaller in size and are associated with lower audit quality, lower institutional ownership and less effective internal controls. Our results should be of use to regulators, auditors and audit committees in the United States, Australia and other countries for assessing the likelihood of noncompliance with fair value disclosure rules and improving the quality of fair value disclosures provided to investors.

ANALISIS PENGARUH PROFITABILITAS, UKURAN PERUSAHAAN, LEVERAGE, DAN PENGUNGKAPAN SOSIAL TERHADAP NILAI PERUSAHAAN PADA PERUSAHAAN MANUFAKTUR YANG TERDAFTAR DI BURSA EFEK INDONESIA PERIODE 2011-2015

Economic growth that affects the welfare of the people can be pursued by investing. Investors will be interested to invest when the value of the company is high. Corporate value is an important concept for investors, because it is an indicator for the market to assess the company as a whole. This study aims to examine the effect of profitability, firm size, leverage, and social disclosure of corporate value. This research uses purposive sampling method in conducting sample selection. The statistical method used to test the hypothesis is multiple linear regression analysis. This study uses 81 manufacturing industry companies listed on the Indonesia Stock Exchange in the period 2011-2015. The results of this study indicate that profitability, firm size, leverage, and social disclosure affect the value of the company.

Fair value disclosure of pension plan assets and audit fees

Effective December 2009, FAS 132(R)-1 expands the prior disclosure requirements on pension plan assets by requiring firms to disclose the fair value inputs and measurements of pension assets. This study examines whether the different level of pension asset fair value inputs required under FAS 132(R)-1 affects audit fees, and investigates whether more expanded fair value disclosure requirements alone can have any impact on audit fees that proxy for auditors’ efforts. During our sample period from 2009 to 2010, we find supporting evidence that audit fees are an increasing function of Level 3 fair value assets that are more subjective. In addition, in a difference-in-difference test, we find evidence supporting our hypothesis that audit firms increase their audit fees after the adoption of FAS 132(R)-1, especially for the client firms that have more Level 3 pension assets. Considering that auditors have had access to the detailed fair value measurement information even before 2009, our results imply that a more detailed disclosure requirement on pension plan assets alone can affect auditors’ audit efforts and audit fees accordingly.

Do measurement-related fair value disclosures affect information asymmetry?

Using a sample of European real estate firms over the 2007–2010 period, this study provides some evidence that measurement-related fair value disclosures reduce information asymmetry. We find a negative association between the extent of fair value disclosures and the bid-ask spread, but no association with two additional measures of information asymmetry (zero returns and price impact). Contrary to our expectation, we fail to find evidence that firms using model estimates exclusively benefit the most from such additional disclosure. Analysing measurement errors (the absolute difference between the selling price of an asset and its fair value prior to sale), we find that firms that use model estimates exclusively and provide more measurement-related disclosures have lower errors and more accurate fair value estimates. In other words, if our lack of results is due to investors not using this additional disclosure this is to their detriment.

ЦІННІСТЬ ДИКОЇ ПРИРОДИ В США: ВІД ІДЕЇ ДО ПРАКТИКИ

The development of the idea of wildlife conservation in the USA has investigated. The role of colonization of the North American continent in attracting interest to wildlife has identified. Two vectors of such influence are determined: negative impact (destruction of many species of flora and fauna) and positive (the discovery of unique natural landscapes). The contribution of American painters, writers, scholars, and statesmen of late 19th – 20th centuries in the disclosure of the non-economic value of wildlife and the creation of the first areas of its protection has defined. The US legislation on wildlife conservation in the twentieth century has analyzed. The role of US President Theodore Roosevelt in establishing the first US nature reserves has revealed. It has concluded that on the eve of World War II, American society has already spread an understanding of the importance of protecting wildlife and American presidents carried out fragmentary measures in this area. Despite the widespread perception of wildlife in American society in terms of assessing its economic value, which was associated with the needs of hunting and tourism development, an understanding of the importance of preserving the species of wild flora and fauna for the development of ecosystems has been already developed. On this basis, in the second half of the twentieth century, the first legislative acts on the protection of wildlife were adopted. It has proved that the first in the world the United States gave a legal definition of wildlife and enshrined it in 1964 the Wilderness Act. The term “wild river” introduced by the Wild and Scenic Rivers Act (1968) has analyzed. The growth of the National System of Wildlife Refuges and the procedure for the creation of such sites in the USA have considered. The modern problems of wildlife conservation in the USA are clarified. It is found that they are closely connected with the considerable increase in resource requirements due to population growth and urbanization. A conclusion is made about the US influence on the development of wildlife conservation in European countries, which adopted the first laws in wildlife protection only in the 1990s.