Fair Value Disclosures and Fair Value Hierarchy: Literature Review on the Implementation of IFRS 13 and SFAS 157

Alessandro Ghio, Andrei Filip, Anne Jeny

Research output: Book/ReportCommissioned ReportOther


Fair Value Measurement accounting standards, i.e., IFRS 13 and SFAS 157, have been widely discussed and challenged by both academic literature and practitioners. In an attempt to provide a comprehensive understanding of the consequences of IFRS 13 and SFAS 157 implementation, we provide a critical analysis of the related academic literature. We identify and discuss five topics, i.e., value relevance, information content, managerial judgement, economic consequences, and common critiques to fair value estimates. We document that assets and liabilities estimated at fair value are usually value relevant and investors value additional firms’ disclosure about fair value estimates. Past research supports the conjecture that fair value estimates may trigger opportunistic managers’ behaviours, especially in the presence of significant managerial discretion. Fair value estimates are often associated with an increase in the cost of financing and audit effort. Empirical evidence also shows that bank regulation, and not fair value accounting, mostly stimulated the pro-cyclical leverage contributing to the financial crisis. The aforementioned results vary across Level’s inputs, and they do not always follow the fair value hierarchy, i.e. the relative ordering of the three Level’s inputs. In fact, multiple factors influence the impact of fair value estimates, such as type of underlying assets, managerial intent, market conditions, and institutional environment. Our results represent a support to researchers and regulators by providing an up-to-date state of knowledge of the implementation of fair value measurement accounting standards. Our comprehensive analysis provides evidence to foster changes aiming to improve financial reporting quality.
Original languageEnglish
Place of PublicationParis France
PublisherAutorité des Normes Compatables
Commissioning bodyAutorité des Normes Compatables (ANC)
Number of pages34
Publication statusPublished - 2018


  • fair value
  • ifrs 13
  • sfas 157
  • value relevance
  • financial crisis
  • corporate governace

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