Keywords
fair value, disclosure, reliability, stock options
Abstract
One consequence of the shift to fair value measurement is the emergence of voluntary disclosures in audited financial statements that question the reliability of mandated fair value information. We refer to these disclosures as reliability disavowals and address three questions: Are fair value estimates less reliable for firms that disavow? Do managers of disavowal firms have reason to believe that they cannot reliably estimate the disavowed fair values? Are factors indicative of reliability problems associated with the decision to disavow? We address these questions in the context of managers’ stock option compensation estimates disclosed under SFAS 123. Our results suggest reliability disavowals reflect legitimate reliability concerns, consistent with managers believing that supplemental disclosures about fair value estimates provide useful information about the limitations of the estimates, which is the FASB’s position in SFAS 157.
Original Publication Citation
Blacconiere, W., J. Frederickson, M. Johnson, and M. Lewis. 2011. “Are Voluntary Disclosures that Disavow the Reliability of Mandated Fair Value Information informative or opportunistic?”, Journal of Accounting and Economics 52: 235–251.
BYU ScholarsArchive Citation
Blacconiere, Walter G.; Frederickson, James R.; Johnson, Marilyn F.; and Lewis-Western, Melissa F., "Do Voluntary Disclosures that Disavow the Reliability of Mandated Fair Value Information Reflect Legitimate Concerns About Reliability?" (2010). Faculty Publications. 8509.
https://scholarsarchive.byu.edu/facpub/8509
Document Type
Peer-Reviewed Article
Publication Date
2010
Publisher
Journal of Accounting and Economics
Language
English
College
Marriott School of Business
Department
Accountancy
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