Did Fair-Value Accounting Contribute to the Financial Crisis?

By Christian Laux, Christian Leuz. 2010

547 citations recorded by the source corpus.

Subfields: Accounting, Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/0ecca17bd73befa399847fb00edd8eb79884aa5b

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Citations in the corpus

Crisis-Related Shifts in the Market Valuation of Banking Activities (2012, unknown): “…of regulatory risks (e.g., the uncertain consequences of the Volcker Rule), after controlling for other influences, dividend payments (a signal 1 Laux and Leuz (2010) find little evidence that su per se, indicating that extraordinary features of the of management and regulatory perceptions of…”
Evidence-based policymaking: promise, challenges and opportunities for accounting and financial markets research** (2018, unknown): “…that banks reported at fair value, what fraction of these assets were actually marked to market as opposed to a matrix or a model, and information on when banks started taking write-downs on their financial assets, relative to when the crisis unfolded (see discussions by Laux and Leuz 2009, 2010).”
A Real Effects Perspective to Accounting Measurement and Disclosure: Implications and Insights for Future Research (2016, background): “In a setting where managers possess private information about spot prices and hedging is imperfect, hedge disclosures actually 18 See Hansell [1995] and Wallace [2003].”
The effects of the European debt crisis on earnings quality (2013, background): “For example, Laux and Leuz (2010) report that during a crisis, managers may be tempted to sell assets below their fundamental value in order to preserve firm's profitability.”
Accounting for financial stability: Bank disclosure and loss recognition in the financial crisis (2021, unknown): “, Ryan (2008), Laux and Leuz (2010), Bhat, Frankel, and Martin (2011), Badertscher, Burks, and Easton (2012), Bowen and Khan (2014), Xie (2016), and Laux and Rauter (2017) for studies on the role of FVA for banks.”
Market pricing of banks’ fair value assets reported under SFAS 157 since the 2008 financial crisis (2015, unknown): “We conduct this analysis because it is important to understand how fair value estimates are perceived by investors when market conditions change (Laux and Leuz, 2009, 2010).”
The Role of Accounting in the Financial Crisis: Lessons for the Future (2011, unknown): “Laux and Leuz (2009) find that the evidence of the impact of fair value changes on bank income and regulatory capital was limited.”
The Interaction of the IFRS 9 Expected Loss Approach with Supervisory Rules and Implications for Financial Stability (2016, unknown): “Indeed, during the financial crisis the application of prudential filters acted as a safeguard by shielding banks from unrealised fair value losses (Laux & Leuz, 2010).”
Simulation methods to assess the danger of contagion in interbank markets (2011, background): “J. Financial Stability (2011), doi:10.1016/j.jfs.2010.12.001 to-model accounting (Borio et al., 2009; Laux and Leuz, 2009; Amel-Zadeh and Meeks, 2009), market illiquidity, Knightian uncertainty (Caballero and Simsek, 2009) and subtle institutional details such as the “breaking the buck”26…”
Bank earnings and regulatory capital management using available for sale securities (2017, unknown): “Nissim and Penman (2007) and Laux and Leuz (2010) report that banks classify 95% of non-trading securities as AFS, which represents 16% of total assets.”