Publication Type

Conference Paper

Publication Date

1-2017

Abstract

Prior research suggests that there are significant differences in how investors perceive thereliability of fair values across the fair value hierarchy. An unaddressed question in this stream ofresearch is whether cross-country differences in institutional factors are able to mediatedifferences in reliability for the fair value hierarchy measurements. Based on an internationalsample of banks across 20 different countries, we find that the probability of crash risk is loweramong countries with better financial development infrastructure, greater level of trust, tightersecurity regulations and higher level of disclosure requirements. These results apply to Level 1assets but not to Level 2 and Level 3 assets. We also document that these cross-country factorsimprove the trading volume of our sample banks. Our study suggests that while ongoingconcerns toward the more opaque fair values are not fully eliminated by institutional differences,they matter in influencing investor willingness to trade in these stocks.

Keywords

Fair value accounting, Institutional factors, Realibility

Discipline

Accounting | Finance and Financial Management

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

7th International Conference of the Japanese Accounting Review 2017, Kobe, Japan, 2017 January 7;Journal of Contemporary Accounting and Economics (JCAE) Doctoral Consortium and Annual Symposium, Taipei, Taiwan, 2017 January 4-6;The 29th Australasian Finance and Banking Conference, Sydney, Australia, 2016 December 14-16;The 2017 AsiaPacific University-Industry Engagement Conference, Adelaide, Australia, 2017 February 15-17

Publisher

SAGE Publications (UK and US) / Brill Academic Publishers

City or Country

Kobe, Japan

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Comments

7th International Conference of the Japanese Accounting Review 2017, Kobe, Japan, 2017 January 7; Journal of Contemporary Accounting and Economics (JCAE) Doctoral Consortium and Annual Symposium, Taipei, Taiwan, 2017 January 4-6; The 29th Australasian Finance and Banking Conference, Sydney, Australia, 2016 December 14-16; The 2017 AsiaPacific University-Industry Engagement Conference, Adelaide, Australia, 2017 February 15-17

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