Academic journal article International Advances in Economic Research

Fair Value Accounting for Financial Instruments: An Historical Perspective

Academic journal article International Advances in Economic Research

Fair Value Accounting for Financial Instruments: An Historical Perspective

Article excerpt

During the last 30 years, financial reporting faced the shifting of measurement bases from the traditional concept of historical costs towards a fair value concept. This research follows the path of financial instruments' disclosure, measurement, and recognition back from 1988 until nowadays and analyses the regulations issued, both by United States and International Accounting Standards, through the point of view of the historical events which led to their appearance.

This study brings its contribution to the complementing growing literature on the relevance of fair value, but focuses on the assessment of fair value as a measurement base for financial instruments. The objective of the paper is to link the regulations with the historical events which have guided them to their current shape and meaning. The main aim is to show how the experience of different countries has put its mark on the evolution of these regulations. There were briefly reviewed capital market studies that examine the usefulness of fair value accounting to investors. In doing so, several key issues which need to be analyzed were identified and through which we draw conclusions after a closer analysis for the case of the Romanian and Czech capital markets. In financial reporting, U.S. and International Accounting Standards have issued several disclosure, measurement, and recognition standards for financial instruments. …

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