Who Uses Fair-Value Accounting for Non-Financial Assets Following IFRS Adoption?*

Publisher Website
Google Scholar
Abstract
This study examines whether and why fair value is preferred to historical cost accounting in practice. We study companies' choices in a setting where they can freely choose between these two valuation methods. We find that historical cost by far dominates the choice of fair value with the exception of investment property owned by companies with primary activity in real estate. More specifically, for plant, equipment, and intangible assets close to none of the companies examined use fair value accounting. Our cross-sectional tests indicate that fair value companies exhibit significantly higher asset values on their balance sheets. The evidence is consistent with contracting needs shaping the accounting policy choice.

This publication has 0 references indexed in Scilit: