财务报告的质量公允价值是利还是弊外文翻译.docx

财务报告的质量公允价值是利还是弊外文翻译.docx

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财务报告的质量公允价值是利还是弊外文翻译

外文文献翻译

原文：

Financialreportingquality:

isfairvalueaplusoraminus?

RecentdeliberationsbyboththeInternationalAccountingStandardsBoard（IASB）andtheFinancialAccountingStandardBoard（FASB）intheUnitedStateshavefocusedonhowfairvaluesofassetsandliabilitiesshouldbemeasured.Theissueofwhen,ratherthanhow,fairvaluemeasurementshouldbeappliedisstillfarfromresolved,however.FairvalueshavebeenmandatedforsomeassetsandliabilitiesunderbothIASBandFASBstandards,butitisfairtosaythatprinciplesgoverningtheapplicabilityoffairvalueshaveyettobearticulated:

whenisfairvalueaccountingappropriateandwhenisitnot?

Or,intermsofmychargeforthispaper,underwhatcircumstancesisfairvalueaplusoraminus?

Toprepareformytask,Imadeasurveyofpublicstatementsmadeforandagainstfairvalueaccountingbyavarietyofstandardsetters,

regulators,analysts,andpreparers.Thestated‘minuses’typicallypointtothedangersoffairvalueestimatesfrommarkingtomodelratherthanmarkingtomarket,concernsaboutintroducing‘excessvolatility’intoearnings,andfeedbackeffects（onbanks’lendingpractices,forexample）thatcoulddamageabusinessand,indeed,heightensystematicrisk.Afewantagonistsquestionwhetherfairvalues（forbankassetsandliabilities,forexample）reallycapturetheeconomicsofabusiness（infosteringcoredepositsandmakingloans）.Incounterpoint,theproponentsoffairvaluearguethatfairvalueisasuperioreconomicmeasuretohistoricalcost.Considerthefollowingarguments,oftenadvancedas‘pluses’:

•Investorsareconcernedwithvalue,notcosts,soreportfairvalues

•Withthepassageoftime,historicalpricesbecomeirrelevantinassessinganentity’scurrentfinancialposition.Pricesprovideup-to-dateinformationaboutthevalueofassets.

•Fairvalueaccountingreportsassetsandliabilitiesinthewaythataneconomistwouldlookatthem;fairvaluesreflecttrueeconomicsubstance.

•Fairvalueaccountingreportseconomicincome:

inaccordancewiththewidelyacceptedHicksiandefinitionofincomeasachangeinwealth,thechangeinfairvalueofnetassetsonthebalancesheetyieldsincome.Fairvalueaccountingisasolutiontotheaccountant’sproblemofincomemeasurement,andistobepreferredtothehundredsofrulesunderlyinghistoricalcostincome.

•Fairvalueisamarket-basedmeasurethatisnotaffectedbyfactorsspecifictoaparticularentity;accordinglyitrepresentsanunbiasedmeasurementthatisconsistentfromperiodtoperiodandacrossentities.

Soself-evidentdothesepointsseemtobethatfairvalueaccountingisoftenjustpresumedtobe‘morerelevant’.Thewords,‘fairvalue’soundgood（whocouldbeagainstice-creamandfairvalue?

!

）while‘historicalcost’sounds,well,passé.Asitturns,out,however,eachofthesestatementsbecomesqualifiedunderscrutiny.Caneconomicargumentleadtoconstructiveargumentsforimplementingfairvalueaccounting?

1.Whatisfairvalue?

Threenotionsoffairvalueaccountingenterthediscussion,andonemustbeclearwhichisbeingentertained

（1）Fairvaluevariouslyappliedina‘mixedattributemodel’:

Inthistreatment,fairvalueisusedalternativelywithhistoricalcostforthesameassetorliabilitybutatdifferenttimes;theaccountingisprimarilyhistoricalcostaccounting,butfairvaluesareappliedundercertainconditions.Examplesarefairvaluesappliedinfresh-start（thatthenproceedsunderhistoricalcostaccounting）,impairmentfromhistoricalcosttofairvalue（reallyaformoffresh-startaccounting）,usingfairvaluestoestablishhistoricalcost（forbartertransactionsanddonations,forexample）orintheallocationofpurchaseprice（betweengoodwillandtangibleassets,forexample）,andreferencetofairvaluetodisciplineestimatesunderhistoricalcostaccounting.

（2）Fairvaluecontinuallyappliedasentryvalue:

Assetsarerevaluedattheirreplacementcost,withcurrentcoststhenrecordedintheincomestatement,withunrealised（holding）gainsandlossesalsorecognised.Revenuerecognitionandmatchingismaintainedbutincome,based

oncurrentcosts,issaidtobeabetterindicatorofthefutureandnotpath-dependent.

（3）Fairvaluecontinuallyappliedasexitvalue:

Assetsandliabilitiesareremarkedeachperiodtocurrentexitprice,withunrealisedgainsand

lossesfromtheremarkingrecordedaspartof（comprehensive）income.

1.1.Fairvaluetowhom?

Aswithanypolicyissue,prescriptionscannotbemadewithoutanunderstandingoftheobjectivesoftheexercise.Towhomarewereporting?

Whoseplusesandwhoseminuses?

Differentusersmaydemanddifferentaccountingreports,andconfusionreignsifissuesarediscussedatcrosspurposes.Ashareholdermightrecogniseagainfromafallinthemarketvalueofdebtascreditworthinessdeteriorates,butnotthecreditor.Bankshareholdersmightwishtoseebankdepositsatfairvalue,butnotthedepositors.Abankregulatorwouldalsobeconcernedaboutreportingdepositsatlessthanfacevalueifsuchreportingaffecteddepositors’confidenceinthebankingsystem.Whileaninvestormightwelcometheinformationaboutvolatilitythatfairvalueaccountingreveals,notsoacentralbankerwhomightbeconcernedabout

feedbackeffectsonsystematicrisk.Abankregulatormightbeconcernedaboutmarkingupbankscapitalduringspeculativetimeswiththeresultingincentiveforprofligatelending.

Inthistalk,Itakeashareholderperspective:

whataretheplusesandminusesofusingfairvalueaccounting（ratherthanhistoricalcostaccounting）forreportingtoshareholders?

This,Isubmit,ishardlycontroversial;theshareholdersaretheownerstowhommanagementandauditorsreport.Butitdoesmeanthat,ifstandardsettershaveabroadersetofconstituentsinmind,withanobjectiveofgeneralpurposefinancialreporting,thentheymayseetheissuesdifferently.

1.2.Myapproach

Normativestatementsaboutaccountingissuesareoftenstatementsoftheauthor’sreceivedwisdomcombinedwithsomeapriorithinking:

hereiswhatIthinkaboutthematter,saystheauthor,supportedbysomeinductiveanddeductivelogic.Thisapproach,appliedinthe‘accountingtheory’eraofthe1950stothe1970s,gaveusnumerousprescriptionsbutlittleresolution.Itwouldbehelpfultorefertoconcreteresearchresultsforanswers,buttheoreticalandempiricalresearchhasnotdeliveredadefiniteresolutioneither.RecentaccountingbasedvaluationtheoryhasgivenussomeinsighttowhichIwillreferlater.Empiricalresearch（ofthetypediscussedbyWayneLandsman）documentscorrelationsbetweenfairvaluemeasurementsandstockpricesthatareusefulforunderstandingwhetherfairvaluesare‘relevanttoinvestors’.Butitdoesnotgiveusmuchofahandleonthepolicyquestionofwhetherfairvaluesshouldbereportedinplaceofhistoricalcostaccounting（which,researchshows,isalsorelevanttoinvestors）.

Myapproach,Imustconfess,islargelyapriori.ButIhopetogetsomebitebytakingwhatmightbereferredtoasademandapproach.Accounting,asIseeit,isaproductandproductsareamatterofdesign.Thedesign–andthequalityoftheproduct–shouldbejudgedonhowwellitservesthecustomer.So,withthecustomeridentifiedastheshareholder（above）,Iaskwhichproductfeatures–fairvalueorhistoricalcost–help（orfrustrate）thecustomer.Unfortunately,inferringdemandfromstatementsmadeinthecurrentregulatoryenvironmentisdifficult,giventhatregulationaffectsbehaviour.Wedoobservethevoluntaryapplicationoffairvalueaccounting（withoutthecoercionofregulation）insomesituations–unregulatedhedgefundsusefairvalueaccounting,forexample–andsowecandeferto‘themarket’forlessons.Suchobservationsarelimited,however,soIresorttoapriorianalysis.ButIdosowithaneyetotheshareholder;Ipresumethatshareholdersrequireaccountinginformationfortwopurposes:

（1）.Valuation.Shareholdersuseaccountinginformationtoinformthemaboutthe（fair）valueoftheequity:

Whatistheequityworth?

（2）.Stewardship.Shareholdersuseaccountinginformationtoassessthestewardshipofmanagement,theowners’employees:

Howefficienthavemanagersbeeninmakinginvestmentsandconductingoperationstoaddvalueforshareholders?

2.Fairvaluemeasurements

Conceptsaretheplacetostart,buttherubberhitstheroadwithmeasurement.Ifidealfairvalueaccountingcanbeimplemented,allisOK,fornothingislostbyabandoninghistoricalcostaccounting,andsomethingisgained;wehaveanetplus.However,iffairvaluemeasurementsdonotachievetheidealandatthesametimewelosetheinformationprovidedbyhistoricalcostaccounting,damagecanbedone.

Afterdefiningfairvalueasmarketexitprice,therecentFASBStandard157,FairValueMeasurements,thenidentifiesthreelevelsof‘inputs’todeterminemarketprice,distinguishedbyincreasinglevelsofsubjectivity.10Levels2and3refertoestimatesofhypotheticalmarketprices.Thecriticismsofsubjectivemeasurementarewellknown,andtheFASB’sLevel3,inparticular,raisesconcerns.Tosortouttheplusesandminuses,itisworthwhiletofocusonLevel1measurement–wheremarketpricesforidenticalassetsandliabilitiesareobservedinactivemarkets–for,iffairvalueaccountingisnotappropriateinthatcase,concernsarejustmagnifiedwhensubjectiveestimatesaremade.

3.Conclusion:

plusesandminuses

InthispaperIhavetakenademandapproachinconsideringtheplusesandminusesoffairvalueaccounting:

Dofairvaluesenhancethetaskofequityvaluationandstewardshipassessment?

SurelyIha