TY - JOUR
T1 - Fair value measurement and accounting restatements
AU - Lin, Yi-Hung
AU - Lin, Steve
AU - Fornaro, James
AU - Huang, Hua-Wei
PY - 2017/9
Y1 - 2017/9
N2 - This study investigates the association between accounting restatements and reporting different levels of fair value measurements as defined by SFAS No. 157. We find that firms with higher ratios of Level 3 fair value assets (i.e., financial assets which fair values are determined by unobservable, firm-generated inputs) to total assets are more likely to subsequently restate their financial statements. Further analysis shows that this association is driven by the restatements caused by errors and managerial manipulation. Overall, our results suggest that use of less reliable (Level 3) fair value measurements may reduce financial reporting quality.
AB - This study investigates the association between accounting restatements and reporting different levels of fair value measurements as defined by SFAS No. 157. We find that firms with higher ratios of Level 3 fair value assets (i.e., financial assets which fair values are determined by unobservable, firm-generated inputs) to total assets are more likely to subsequently restate their financial statements. Further analysis shows that this association is driven by the restatements caused by errors and managerial manipulation. Overall, our results suggest that use of less reliable (Level 3) fair value measurements may reduce financial reporting quality.
KW - Accounting restatements
KW - Corporate governance
KW - Level 3 fair values
KW - SFAS No. 157
UR - http://www.scopus.com/inward/record.url?scp=85025674149&partnerID=8YFLogxK
U2 - 10.1016/j.adiac.2017.07.003
DO - 10.1016/j.adiac.2017.07.003
M3 - Article
AN - SCOPUS:85025674149
VL - 38
SP - 30
EP - 45
JO - Advances in Accounting : a Research Annual
JF - Advances in Accounting : a Research Annual
SN - 0882-6110
ER -