scholarly journals Investment Property, Cost Model, Fair Value Model and Value Relevance: Evidence From Malaysia

2020 ◽  
Vol 11 (3) ◽  
pp. 115
Author(s):  
Mohd Halim Kadri ◽  
Juyati Mohd Amin ◽  
Zarina Abu Bakar
Keyword(s):  
Value Relevance ◽  
Cost Model ◽  
Simple Random Sampling ◽  
Fair Value ◽  
Listed Firms ◽  
Final Sample ◽  
Equal Chance ◽  
Property Companies ◽  
Value Model ◽  
Selection Of

The purpose of the study is to investigate the value relevance of investment property of Malaysian listed firms based on cost model and fair value model for measuring their investment properties. Some studies suggested fair value model is more value relevant and some other studies suggested cost model is more value relevant. The sample was selected using a simple random sampling so that all listed firms have equal chance to be selected. A final sample of 108 firm-year from various industries was selected for a period from 2018 to 2019. Equity valuation models developed by Landsman (1986) and Ohlson (1995) were used to test the value relevance of investment property employed by listed firms in Malaysia. The models were used to test the value relevant of pooled sample, fair value sample and cost sample. The results show that firms’ investment properties are value relevant regardless whether cost model or fair value model was selected. It was also found that depreciation included in cost model and fair value gain or loss included in fair value model net profits are value relevant. The study implicates that cost model is more value relevant in measuring investment property. The result provides useful insight to standard setter about the effect of selection of fair value model and cost model towards share market value. Standard setters, researchers and academics would benefit from this as prior research in Malaysia suggests that investment properties (in general) are not value relevant even though investment properties of property companies are value relevant.

scholarly journals Fair Value Information, Audit fees and Audit Committee in Taiwan

2017 ◽  
Vol 8 (2) ◽  
pp. 124
Author(s):  
Shu-Hsing Wu ◽  
Tsung-Che Wu ◽  
Kun-Lin Yang
Keyword(s):  
Audit Committee ◽  
Cost Model ◽  
Audit Fees ◽  
Fair Value ◽  
Regulatory Requirements ◽  
Audit Risk ◽  
Level 3 ◽  
Voluntary Choice ◽  
Value Model

Regulatory requirements to adopt IFRS and to disclose audit fees make it possible to examine association between audit fees and proportion of fair-valued assets among firms in Taiwan. A voluntary choice of adding audit committee in the firm for monitoring purpose also helps to examine the association further. Empirical results indicate that lower audit fees is related to higher proportion of (Level 2) fair-valued assets, a finding consistent to Goncharov et al.’s (2014) suggestion that firms pay lower audit fees with fair-value model than with cost model. Insignificant association is found for proportion of Level 3 fair-valued assets, which is similar to Glover et al.’s (2014) suggestion that firm’s reluctant attitude in adopting Level 3 assets. Last of all, when audit committee is added, firm’s audit fees is negatively associated with Level 1 and 2 fair-valued assets, implying audit committee’s role of monitoring and further reducing audit risk and audit fees among Taiwanese firms.

scholarly journals Comparability of Accounting Choices in Future Valuation of Investment Properties: An Analysis of Brazilian and Portuguese Listed Companies

2015 ◽  
Vol 26 (68) ◽  
pp. 154-166 ◽  
Author(s):  
Flaida Êmine Alves de Souza ◽  
Reiner Alves Botinha ◽  
Pablo Rogers Silva ◽  
Sirlei Lemes
Keyword(s):  
Financial Reporting ◽  
Cost Model ◽  
Fair Value ◽  
Listed Companies ◽  
Financial Reporting Standards ◽  
Accounting Choices ◽  
Explanatory Factors ◽  
Model Versus ◽  
The Cost ◽  
Value Model

<p>One of the main purposes for adopting the International Financial Reporting Standards (IFRS) is the quest for comparability between financial statements within the same country, over time, and between different countries. IFRS have the feature of allowing accounting choices in most of their standards. However, the existence of such flexibility in the process for recognizing, measuring, and disclosing as sets and liabilities may impact on comparability. IFRS have been criticized both due to their accounting choices and the adoption of the fair value paradigm. This article examines these two issues, investigating the choice of the cost model versus the choice of the fair value model for investment properties (IPs), an option guaranteed under the terms of the International Accounting Standard (IAS) 40. This research aimed to identify the comparability degree and the factors that determine the accounting choices made by managers of IPs, in Brazilian and Portuguese listed companies, within the periods from 2010 to 2012. Comparability, within and between countries, was identified by the T-index and the search for the determining factors of accounting choices made by managers was performed by means of a logistic re gression analysis. As a result, it was found that, despite the accounting choices allowed by IAS 40, there was a mean comparability between the accounting practices of firms in these countries, but showing a decrease in the index over the years. The explanatory factors identified were auditing by one of the big four (PricewaterhouseCoopers, Deloitte Touche Tohmatsu, KPMG, or Ernst & Young), companies' indeb tedness, relative importance of IPs' balance, net profit, and less experience of Brazil in using the fair value method to appraise IPs.</p>

scholarly journals Dylematy wyceny inwestycji niefinansowych

2014 ◽  
pp. 5-19
Author(s):  
Anna Kuzior
Keyword(s):  
Cost Model ◽  
Balance Sheet ◽  
Fair Value ◽  
Price Model ◽  
Initial Value ◽  
Historical Cost ◽  
Income Statement ◽  
Financial Investments ◽  
Value Model ◽  
Gains And Losses

The article presents problems concerning non – financial investments, their range, classification and measurement based on Polish accounting law. Possibilities of initial value calculations of different groups of investments were presented. The rules of measurement after initial recognition as well as the depreciation of investment property were described here. The valuation models used at the balance sheet date were depictured – historical cost model, fair value model and lower price model. External and internal indications of impairment as well as the procedure of tests for impairment were described in the article. Problems of operational and investment assets reclassification were mentioned. Treatment and allocation of results of valuation and selling non – financial investments were presented. The rules of gains and losses presentation in an income statement were criticized.

scholarly journals El valor razonable en la contabilidad de los instrumentos financieros. Análisis desde una perspectiva histórica

2017 ◽  
Vol 14 (26) ◽  
pp. 90 ◽  
Author(s):  
José Morales Díaz
Keyword(s):  
Financial Crisis ◽  
Mixed Model ◽  
Cost Model ◽  
Fair Value ◽  
Point Of View ◽  
Financial Instruments ◽  
Accounting Model ◽  
Siglo Xix ◽  
Value Model ◽  
New Evidence

El objetivo del presente artículo se centra en analizar si, desde finales del siglo XIX hasta el presente, ha existido algún momento en el tiempo en el que haya habido un modelo contable de instrumentos financieros (Modelo de Coste, Modelo Mixto o Modelo de Valor Razonable Total) que haya alcanzado plena "legitimidad" en alguna de las dimensiones establecidas siguiendo los principios enunciados por Suchman (1995).La principal contribución que queremos lograr es obtener nuevas evidencias sobre la conveniencia de aplicar el Modelo de Valor Razonable completo a la contabilidad de los instrumentos financieros.  Hemos descubierto que, incluso en el período de los años 40 a los 70, en el que el Modelo de Coste prevaleció de manera clara en las prácticas contables, muchos investigadores e instituciones continuaron defendiendo el uso del valor razonable. En ese período podría incluso hablarse de legitimidad del Modelo de Coste, pero simplemente desde un punto de vista pragmático, considerando su origen y continuidad. Se observan igualmente aspectos morales relacionados con la prevención de otra crisis financiera. Hoy en día, podemos decir que el Modelo Mixto está plenamente establecido en las prácticas contables, pero carece de una legitimidad total, conclusión avalada por las críticas de los propios organismos reguladores, el IASB y el FASB. The aim of this article is to analyze whether, from the end of the nineteenth century until the present, there has been any moment in time in which there has been an accounting model for financial instruments (Cost Model, Mixed Model or Full Fair Value Model) that has reached full "legitimacy" in some of the established dimensions following the principles stated by Suchman (1995).The main contribution we want to achieve is to provide new evidence about the convenience of applying the Full Fair Value Model for financial instruments. We have found that, even in the period from the 40s to the 70s in which Cost Model prevailed in a clear way in accounting practices, many researchers and institutions continued to defend the use of fair value. In this period, we could perhaps talk about legitimacy of Cost Model but simply from a pragmatic point of view, considering its origin and continuity. We can even observe moral aspects in order to prevent another financial crisis. Nowadays we can say that the Mixed Model is fully established in accounting practices but it does not have a full legitimacy, a conclusion supported by the criticisms of the regulators, the IASB and the FASB.

Is Voluntary Disclosure Value Relevant? Evidence from Top Listed Firms in India

2021 ◽  
pp. 097226292098629
Author(s):  
Rupjyoti Saha ◽  
Kailash Chandra Kabra
Keyword(s):  
Voluntary Disclosure ◽  
Value Relevance ◽  
Stock Exchange ◽  
Market Value ◽  
Policy Implications ◽  
Positive Contribution ◽  
Listed Firms ◽  
Strategic Disclosure ◽  
Relevant Evidence ◽  
The Relationship

In view of ongoing reforms in India with emphasis on improving transparency of corporate, the present study aims to examine the influence of voluntary disclosure on the market value of India’s top-listed firms. To this end, the study uses a sample of top 100 non-financial and non-utility firms listed at Bombay Stock Exchange based on market capitalization over a 5-year period (2014–2018). To control potential endogeneity in the relationship between voluntary disclosure and firms’ market valuation, fixed effect panel data model and two-stage least squares model of estimation have been employed. The result obtained from the analysis suggests that enhanced level of voluntary disclosure significantly improves the market value of sample firms. The study further undertakes additional analysis by categorizing voluntary disclosure into its sub-components wherein the findings reveal that three components of voluntary disclosure such as corporate and strategic disclosure, forward looking disclosure and corporate governance disclosure make positive contribution towards market value of firms, while the remaining components of voluntary disclosure such as human and intellectual capital disclosure and financial and capital market disclosure do not appear to have any significant influence on the same. Overall, the finding suggests that voluntary disclosure made by sample firms is considered relevant by investors. However, value relevance of different components of voluntary disclosure varies with the nature and extent of information disclosed. The study offers some important policy implications.

Judging the Relevance of Fair Value for Financial Instruments

2011 ◽  
Vol 86 (6) ◽  
pp. 2075-2098 ◽  
Author(s):  
Lisa Koonce ◽  
Karen K. Nelson ◽  
Catherine M. Shakespeare
Keyword(s):  
Value Relevance ◽  
Fair Value ◽  
Data Availability ◽  
Financial Instruments ◽  
Counterfactual Reasoning ◽  
Financial Instrument ◽  
Relevance Judgments

ABSTRACT We conduct three experiments to test if investors' views about fair value are contingent on whether the financial instrument in question is an asset or liability, whether fair values produce gains or losses, and whether the item will or will not be sold/settled soon. We draw on counterfactual reasoning theory from psychology, which suggests that these factors are likely to influence whether investors consider fair value as providing information about forgone opportunities. The latter, in turn, is predicted to influence investors' fair value relevance judgments. Results are generally supportive of the notion that judgments about the relevance of fair value are contingent. Attempts to influence investors' fair value relevance judgments by providing them with information about forgone opportunities are met with mixed success. In particular, our results are sensitive to the type of information provided and indicate the difficulty of overcoming investors' (apparent) strong beliefs about fair value. Data Availability: Contact the authors.

Sign in / Sign up

Export Citation Format

Share Document